Zotefoams plc (LON:ZTF), a world leader in cellular material technology, has announced its unaudited preliminary results for the year ended 31 December 2021.
Financial highlights
| 2021 | 2020 | Change | |
| Revenue | £100.8m | £82.7m | 22% |
| Gross margin | 26.4% | 33.6% | (720)bps |
| Operating profit | £8.1m | £9.1m | (11)% |
| Profit before tax | £7.0m | £8.3m | (16)% |
| Taxation | £2.6m | £1.1m | (131)% |
| Basic EPS | 9.01p | 14.87p | (39)% |
| Cash generated from operations | £12.8m | £13.0m | (2)% |
| Net debt | £34.3m | £35.6m | 4% |
| Leverage ratio1 | 2.1x | 2.1x | – |
| Final dividend2 | 4.40p | 4.27p | 3% |
1 Leverage is that defined under the bank facility, with net debt at the end of the period divided by the preceding 12 months’ EBITDA, adjusted for the impact of IFRS2 and IFRS16
2 Final dividend is subject to approval at the May 2022 AGM
Results highlights
| • | Exceeded £100m sales for the first time in the Group’s history and delivered strong growth across all business units: |
| – Polyolefin Foams sales up 10% to a record £56.2m (2020: £50.9m) and 15% in constant currency | |
| – HPP sales up 41% to £42.3m (2020: £30.0m) and 47% in constant currency | |
| – MuCell Extrusion sales up 32% to £2.29m (2020: £1.73m) and 39% in constant currency | |
| • | Excluding the one-off PPE contract of the prior year, Polyolefin Foams sales up 36% |
| • | Profit margins impacted by: |
| – Significant and unpredictable cost inflation with a lag on sales price increases | |
| – Unfavourable currency movements | |
| • | Basic EPS reduced by 39% due to lower profit and a non-recurring significant increase in the deferred tax charge mostly reflecting the planned increase in UK corporation tax |
| • | Robust cash generation performance maintained, with net debt down 4% and year-end leverage ratio remaining at 2.1x |
Strategic progress
| • | Rapid recovery in Polyolefin Foams demonstrates structural growth prospects in this important business unit, underpinned by the megatrends of environment, regulation and demographics and facilitated by the Group’s well-invested global capacity |
| • | Poland manufacturing plant commissioned in February 2021 |
| • | Another excellent year of HPP growth in footwear products and worked closely with our partner to develop further long-term opportunities |
| • | Significant progress at MuCell Extrusion in developing the ReZorce® mono-material barrier packaging solution, which offers society a truly circular option using existing recycling infrastructure |
David Stirling, Zotefoams CEO, said:
“Geopolitical risks are currently much higher than normal. Whilst these have limited direct impact on our operations currently, we are mindful of the risk that they may lead to more significant indirect impacts, especially in supply chain, inflation and demand, rendering forward looking statements particularly uncertain.
“Currently, we are experiencing good demand across our business consistent with our expectations. Prices for polyolefin foams were increased in January and, in some products and geographies, we have additional increases notified to take effect in the second quarter. The inflationary environment for our input costs remains highly unsettled, with pricing of raw materials, freight and energy in particular expected to be volatile for the remainder of the year, at least, and accentuated by current events in Eastern Europe. Our sales prices and margins are therefore being closely managed. Our operational performance also continues to be challenged by an unpredictable supply chain and the ongoing challenges presented by COVID-19 and its variants. We continue to work hard to manage the impacts of these as effectively as possible, however inefficiencies are to be expected.
“We expect modest volume growth in our Polyolefin Foams business during the year, with a similar product mix to 2021 and a strong benefit from price increases improving margins, subject to managing cost inflation appropriately. In our HPP business unit, both T-FIT insulation and ZOTEK foams for aviation are expected to grow strongly as market conditions improve, particularly in the second half of the year, while demand for footwear products is expected to remain at similar levels to 2021.
“ReZorce barrier packaging represents a potentially very significant opportunity for Zotefoams but depends on achieving a number of developmental milestones, the outcome and timing of which are difficult to predict. We are therefore conducting frequent reviews of progress but currently expect that, working with partners, we will be able to successfully develop and commercialise the technology. We will update stakeholders when appropriate.
“Overall, the Board remains confident about the future prospects for our business”.
