Trading Update and Group CEO Succession
22 May 2024 – Zotefoams, a world leader in cellular materials technology, provides a positive trading update for the four months ended 30 April 2024 (the “period”), ahead of its Annual General Meeting to be held today.
At this meeting Dr Lynn Drummond, Chair of Zotefoams, will make the following statement:
Trading in the period has been strong, with the Group sustaining the positive momentum seen in FY23 to deliver overall sales growth of 14% and record revenue.
Key movements, against the comparative prior year period, were:
- 46% increase in High-Performance Products (HPP) sales:
- Footwear sales grew significantly, with a 44% increase benefitting in part from customer inventory build
- ZOTEK® F foam sales for aviation, space and other technical markets grew by over 100%
- T-FIT®insulation products sales grew by 57%
- 7% decline in Polyolefin Foams sales:
- 2% decline in overall sales volumes, driven by a continuation of subdued demand conditions in certain markets, particularly in continental Europe, which was in part offset by strong volume growth in North America, where the Group is investing in further capacity to support future growth
- Average prices were impacted by unfavourable exchange rate movements (which are hedged) and the Group’s deliberate shift in product mix towards lighter, more cost-effective foams
Alongside the strong trading momentum, the Group has made further progress during 2024 on key strategic initiatives with two important updates made during May:
On 7 May, Zotefoams announced a global alliance agreement with Suzhou Shincell New Materials Co, Ltd (“Shincell”). Initial co-operation, including technology sharing from Shincell to Zotefoams, has begun positively and Zotefoams will provide further details of its plans for the alliance at the time of our August interim results.
On 15 May, Zotefoams delivered a progress update and media launch on ReZorce® mono-material barrier packaging. Refresco, the world’s largest independent beverage solutions provider, is our joint development partner. Focused on the carton market, ReZorce is entering late-stage quality and technical validation in preparation for market trials with a European retailer.
Outlook
The Board anticipates full-year sales growth to come primarily from the HPP portfolio, after a particularly strong four months, with good opportunities across all product groups, together with an expectation of an improving performance from the Polyolefin Foams business unit later in the year. At current exchange rates, the Board expects little impact from currency on full-year profit.
Internally, beyond a focus on continued operational excellence, the Group is directing resource towards three key opportunities:
- ReZorce mono-material packaging development, where a market trial and development of our portfolio of products are priorities, alongside securing external investment;
- Investment in the second low-pressure vessel in the USA, which we expect to commission in Q2 2025; and
- Development options to enhance the benefits achievable under the Shincell alliance arrangement, which includes investment in this technology.
Performance in the first four months of the year has been strong and provides a solid platform from which to deliver further financial and strategic progress in 2024. While being mindful of remaining macroeconomic volatility, the Board’s full year expectations remain unchanged, and it is confident about the long-term prospects of the business.
Group CEO Succession
As previously announced, David Stirling will step down from the Board following the conclusion of the 2024 AGM and be replaced by Ronan Cox.
Commenting on the update David Stirling, Group CEO of Zotefoams, said:
Over my 27 years with Zotefoams, the business has experienced strong growth and transformational change, with significant investment in global manufacturing capacity and in new product development, including the exciting opportunity afforded by ReZorce packaging technology. In the first four months of this year, Zotefoams delivered record sales and made progress on a number of strategic initiatives, and I step down from the Board at a time of significant positive momentum for the business. It has been a pleasure to lead Zotefoams for so many years and I wish Ronan and the team all the best for the future.
Ronan Cox, Group CEO Designate of Zotefoams, said:
I am honoured to step into the CEO role and continue driving Zotefoams’ legacy of innovation and growth. With a strong foundation laid by David and the team, I am excited about the opportunities ahead and committed to leading Zotefoams into its next chapter of success.
Note. The Board understands that current market expectations for the year ended 31 December 2024, prior to release of this trading statement, are revenue of £138.5m and adjusted profit before tax of £14.9m.