Zotefoams reports record first-half sales performance

(Sharecast News) - Cellular materials technology specialist Zotefoams reported record financial results for the first half on Tuesday, driven by strong sales and significant growth in its high-performance products (HPP) division. The London-listed firm said group revenue increased 10% to £71.1m, or 13% at constant currency, compared to £64.6m in the same period last year.

It said the HPP segment led the way with a 37% rise in revenue to £36.1m, up from £26.4 million in the first six months of 2023.

The company also achieved record earnings, with profit before tax climbing 12% to £8.3m.

Excluding the impact of MuCell Extrusion (MEL), profit before tax reached £10.5m, a 12% increase from £9.4m in the prior year.

Gross margins improved by 40 basis points to 33.2%, or 50 basis points to 34.3% when excluding MEL, while basic earnings per share rose 12% to 12.89p.

Zotefoams said its strong performance was underpinned by robust cash generation from operations, which increased to £8.5m from £5.8m in the first half of 2023, supporting higher levels of growth investment.

Reflecting its confidence, the board increased the interim dividend by 4.4% to 2.38p per share.

Strategically, Zotefoams said it continued to benefit from its partnership with Nike, particularly in the footwear segment.

The company said it was also making significant strides with its 'ReZorce' recyclable barrier packaging technology, targeting the liquid paperboard (LPB) carton market.

Zotefoams announced a joint development partnership with Refresco, the world's largest independent beverage packager, and said it was preparing for a market trial of 150,000 sterile juice cartons in Western Europe.

Additionally, the company said it was exploring strategic investment partnerships to scale up ReZorce globally.

Looking ahead, Zotefoams said it was supporting future growth in North America with capital investment in a second low-pressure vessel, scheduled for commissioning in mid-2025.

The firm had also expanded its technical capabilities and market reach through a global alliance with Suzhou Shincell New Materials in China, positioning itself for further growth in both new and existing markets.

"We enter the second half with positive momentum and with the expectation that market trends seen in the first half will remain largely consistent going into the latter part of the year," said group chief executive officer Ronan Cox.

"Footwear demand is expected to normalise over the coming months, as some of the near-term factors benefiting first-half work through, which will free up capacity to supply markets in both North America and Europe.

"We will continue to focus on cost efficiency, supported by a stable outlook for energy and polymer input prices."

Cox said the board was "delighted" with the group's continued progress, with the benefits of its diverse market profile providing both stability and opportunities to unlock growth in a mixed economic backdrop.

"We remain confident that the company will deliver a full year performance in line with market expectations, underpinned by the strong first half performance, and optimistic that we will continue our positive momentum in the medium term."

At 1245 BST, shares in Zotefoams were up 2.83% at 508p.

Reporting by Josh White for Sharecast.com.