- Shares gain 7% to 316p in early trading
- Adjusted pre-tax profit of £15.6 million expected for the year
- Robust performance in core foams business
Shares in Zotefoams (ZTF) gained 7% to 316p in morning trading as the speciality chemicals maker said it expects to report a 16% rise in full year revenue to £147.8 million for the year ending 31 December, helped by a strong fourth-quarter performance.
The company said adjusted pre-tax profit for the year is expected to be £15.6 million, up 19% which is a ‘group record’ and ahead of current market expectations.
The group’s core foams business put in a robust performance year-on-year with 37% growth in HPP (High Performance Product) sales to £79.7 million compared to £58.1 million led by the footwear.
The specialty chemicals maker however reported a marginal fall in Azote polyolefin sales of 1% to £66.9 million reflecting weaker market conditions in several industrial markets.
WIND DOWN OF CARTON PACKAGING BUSINESS REZORCE
Last December the company said it was winding down investment in its carton packaging business ReZorce after being unable to secure an investing partner ‘to realise the commercial potential of the technology.’
The company said it will now ‘focus resources on opportunities in the core foams business units, where the board sees significant opportunity.’
Zotefoams will incur costs of up to £1.5 million for winding down ReZorce which will be accounted for as an exceptional item in their 2024 results.
WHAT DID THE CEO SAY?
Ronan Cox, group CEO of Zotefoams said: ‘We are delighted to close the year strongly, with sales growth and, for a second year running, record profits ahead of current market expectations. The group has, for the first time, achieved higher sales with its higher-margin HPP products than its polyolefin foams, supported by a very strong performance in Footwear.
‘We are disappointed that we were unable to find a partner to commercialise ReZorce, our award-winning packaging solution that offers significant sustainability benefits. The cash savings we will capture will be directed to growth in our refreshed strategy and I am excited to present this to the investor community with my executive team on the afternoon of 18 March as part of a capital markets day.’
ANALYST VIEW
Peel Hunt analysts said: ‘The decision to pause investment into ReZorce and remain focused on the core businesses is sound. The team has continued to strengthen the core foams businesses over full year 2024, demonstrated by the strong performance so far.’
