Zotefoams plc (LON:ZTF) has reported a record third-quarter sales performance, with revenues approximately 11% ahead of Q3 2020 and approximately 35% ahead of Q3 2019. Excluding the significant non-repeating sales of polyolefin foams for personal protective equipment in 2020, Q3 2021 sales increased by approximately 54% compared to Q3 2020.
Demand for polyolefin foams has rebounded strongly in most markets, augmented by previously implemented price increases becoming fully effective in the third quarter. Within HPP, sales of footwear products have continued at approximately the same rate as the first half of 2021 but have been negatively impacted by the well-publicised COVID-related shutdown of our customer in Vietnam. Sales of other High-Performance Products were also significantly above the low levels of demand experienced in Q3 2020, with the result that total Q3 2021 HPP sales were up 75% year-on-year.
The development and early-stage commercialisation discussions of our ReZorce® mono-material barrier technology continues to meet expectations and we look forward to providing further details of this key initiative with the announcement of the full year results.
As previously communicated, the cost base of the business has increased, in part due to the start-up of our Poland facility but also due to commodity polymer price movements, general inflationary cost increases and additional costs incurred in managing current supply chain disruptions and inefficiency. We do not foresee a relaxation in cost pressure in the short to medium term.
We have good visibility of confirmed orders for the remainder of 2021 other than for T-FIT® insulation products, where orders are typically not confirmed until shortly before shipment and the project-based environment is more uncertain. Based on our sales forecasts and current foreign exchange rates, and subject to there being no additional material disruption to the business as a result of the ongoing supply chain challenges, the Board expects full-year revenues and profit before tax to be in line with market expectations.
Commenting on the update David Stirling, Group CEO of Zotefoams, said:
“We have been greatly encouraged by the return of strong underlying demand across most of our industry segments, although continued COVID and supply chain disruption has hampered markets such as automotive, aviation and footwear products. I am pleased that Zotefoams continues to manage this challenging environment of supply chain disruption and cost inflation well, once again demonstrating the resilience and flexibility of our people and our broad customer base. This strong commercial momentum and resilience in operational performance and cash generation gives us confidence to continue to invest for the future in all business units, with ReZorce in particular offering the potential of a very significant opportunity in the years to come”
