Tag: ZTF

Zotefoams plc (LON:ZTF), a world leader in supercritical foams, today announced its unaudited preliminary results for the year ended 31 December 2024.

Financial Headlines

			Group
		2024	2023	Change
Revenue (£m)		147.8	127.0	16%
Gross profit (£m)		46.1	41.1	12%
Operating profit1 before exceptional items (£m)		18.1	15.1	20%
Exceptional items		(15.2)	–	–
Operating profit1,4 after exceptional items (£m)		3.0	15.1	(80)%
Profit before tax1 before exceptional items (£m)		15.3	12.8	19%
Profit before tax1,4 after exceptional items (£m)		0.2	12.8	(99)%
Cash generated from operations (£m)		30.4	12.1	151%
Net debt (£m)		33.0	31.6	(4)%
Net debt ex IFRS16 (£m)		24.1	30.2	20%
Leverage ratio2		0.9	1.2	–
Final dividend3 (p)		5.10	4.90	4%

¹ This is a reported number under UK adopted IAS and is after the deduction of amortisation of acquired intangibles amounting to £0.250m in 2024 and £0.257m in 2023

² 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

³ Final dividend is subject to approval at the May 2025 Annual General Meeting

⁴ After rounding

Results Headlines

·	Record Group revenue of £147.8m, 16% higher than the prior year
·	High-performance product sales surpass those of Polyolefin Foams for the first time, reflecting the Group’s focus on mix enrichment
·	Record operating profit before exceptional items up 20% to £18.1m
	– Includes £4.9m of non-recurring operating cost in the now paused ReZorce project
·	Basic EPS before exceptional items up 37% to 25.95p
·	Non-recurring exceptional costs of £15.2m reflect the impairment of MEL and associated closure costs
·	Strong cash generation reinvested in growth opportunities
	– Cash generated from operations up 151% to £30.4m
·	Strong balance sheet foundation for refreshed strategy
	– Net debt excluding leases down 20% to £24.1m
	– Leverage ratio down to 0.9x from 1.2x
	– Final dividend up 4% to 5.10p

Strategic Progress

·	The Group is today launching its new “Expanding Beyond the Core” strategy aimed at driving long term sustainable growth and shareholder value creation
·	Through increased focus on the customer, continued commitment to innovation, expanding capability to move up the value chain and enhanced organisational execution, the Group is targeting ambitious progress in the medium term:
	– Organic growth of 7% CAGR to deliver FY2029 revenue of >£200m
	– Operating margin of over 18% by FY2029
	– ROCE of over 20% by FY2029
	– Cash conversion of >95%
·	Medium-term targets reflect a longer-term ambition to grow revenues to >£300m and operating profit to >£60m, with the opportunity to accelerate progress through inorganic growth
·	Initial enabling investments for this transformation are underway:
	– Access to new processing technology via a licensing agreement signed in May 24 extends technical capabilities and know-how
	– Capital project in USA to increase local expansion capacity running to budget and on target for commissioning in early H2 2025
	– As announced on 10 March 2025, significant new production and innovation facilities being established in Asia to support the long-term growth of the Group’s Consumer & Lifestyle business

Ronan Cox, Group CEO, said:

“We have made a positive start overall to 2025, with our Consumer & Lifestyle and Transport & Smart Technology verticals performing well across all regions. Demand in our Construction & Other Industries vertical remains more subdued, as expected, but we continue to anticipate some improvement in conditions as the year progresses.

“We have set out, and are executing, a refreshed, focused strategy, prioritising innovation and profitable growth. Our market realignment is progressing well as we transition from a product-centric to an industry-led approach. Our investment in manufacturing excellence is advancing, with continued good progress towards completion of our £10m expansion in the USA, which remains on schedule for early H2 2025 commissioning, and we are commencing with investments in our innovation centre of excellence in the UK, our innovation hub in South Korea, and our new manufacturing facility in Vietnam.

“The emerging trade landscape, including recent trade tariffs, creates both challenges and opportunities for Zotefoams. While these may impact global supply chains and market dynamics, our diversified manufacturing footprint across the UK, USA, Poland and, soon, Vietnam positions us well to navigate these uncertainties and potentially capture market share from less adaptable competitors.

“Our new regional operating model, launched at the start of 2025, structures our business across EMEA, North America, and Asia. This enables us to better serve our customers’ complete needs through a global commercial team that coordinates decisions worldwide, while execution and delivery happens regionally. This product-agnostic approach creates a platform for accelerated growth. In 2025, we will target inefficiencies in overheads, with identified annualised savings to be in part reinvested in our refreshed strategy.

“Polymer and energy input prices remain relatively stable; however, we are monitoring these closely for the impact of tariffs, and our focus on improved asset utilisation, product mix, price increases and operational efficiency continues to be our key driver of margin enhancement.

“While we remain mindful of the uncertain economic backdrop and the evolving trade landscape, we are confident in our ability to deliver another year of good progress for Zotefoams. With a refreshed strategy and investment in significant growth enablers underway, we are excited by the potential for the Group to deliver both on its medium-term targets and longer-term ambition.”

Chair’s statement

A refreshed, focused strategy, prioritising innovation and profitable growth

Dear shareholders

2024 represented the beginning of a transition period for the Group as it sought to invest in its core business, backed by market-leading products, and prepared to expand both sector and geographic presence, underpinned by innovation and an enhanced leadership team. We finished the year in a strong position, with record revenues and profits and a strong balance sheet. The decision to pause our investment in ReZorce^® circular packaging was difficult but necessary, having been unable to secure the important investing partner the Board considered essential to capture the commercial opportunity the technology offers. However, this frees up resources to invest behind an exciting, refreshed strategy to capture market opportunities where we believe we have the right to win and where there is a clear runway for growth. We are switching from a product focus to an industry focus, moving closer to our customers, increasing investment in sustainable innovation and actively assessing inorganic growth options to extend our capabilities. We are investing in our people and have strengthened our executive leadership team to execute our strategy. We believe that this strategy can deliver compelling returns for our shareholders over the medium term and put the Group firmly on the pathway to revenues of over £300m and operating profit of over £60m.  

Board composition

The Zotefoams Board welcomed a new Group CEO to the business during the year. Ronan Cox joined the Board in April 2024 and became Group CEO following the Annual General Meeting held on 22 May 2024, replacing David Stirling. I would like to offer my personal thanks to David, as well as my thanks on behalf of everyone connected to Zotefoams for his significant contributions to the Group during his 23 years of leadership. On 3 March 2025, the Board announced that Gary McGrath, Group CFO, will retire from his role during 2025. He will remain in his existing role until 31 October 2025 or longer if required, as part of a managed succession process. I thank Gary for his ongoing contribution to the business and wish him the very best in his future retirement.

Dividend

The Board is proposing a 4% increase in the final dividend to 5.10p (2023: 4.90p) which, if approved by shareholders, would make a total dividend for the year of 7.48p (2023: 7.18p), an increase of 4.2%. This reflects the Board’s continued confidence in the Group’s future and is in line with its progressive dividend policy, recognising the importance to our shareholders of the dividend as part of their overall return. See the Group’s approach to capital allocation in the Group CFO’s review. If approved, the final dividend will be paid on 2 June 2025 to shareholders on the register on 2 May 2025.

Sustainability

Our purpose is to provide optimal material solutions for the benefit of society, reflecting our knowledge that, used appropriately, plastics are the best solution for a wide range of sophisticated, long-term applications typically delivered by our customers. The Board is focused on the importance of sustainability, and we are targeting an increase in our investment in sustainable innovation while continuing to consider the impacts of climate change in everything we do. Further progress was made in 2024 towards our sustainability targets. See the Group CEO’s review.

Acting responsibly

The Board leads an ongoing programme to ensure the highest standards of corporate governance and integrity across the Group and has remained abreast of developing governance standards. The Board’s interactions and communications with executive management continue to be excellent and, as a result, the Board is well placed to challenge, guide and support executive management in the delivery of the growth strategy. We continue to pay particular attention to the provision of a safe working environment for our staff across all global locations and to the empowerment of our employees. The Board also acknowledges the benefits of diversity, including that of gender and ethnicity, and is committed to setting an appropriate tone from the top in all diversity and inclusion matters.

Looking to the future

Zotefoams has well-invested and differentiated assets across EMEA and North America alongside committed, capable and passionate people and our refreshed strategy expands the Group beyond this core, supporting future profitable growth. Our recently announced investment in Vietnam, supported by a new innovation centre in Busan, South Korea will ensure that Zotefoams is in a strong position to amplify the success of its strategic move in the footwear market, which now represents the Group’s largest segment by revenue. While we are mindful of ongoing macroeconomic and geopolitical headwinds, we remain confident about our future prospects for sustainable growth, improving returns and strong cash generation.

L Drummond

Chair

18 March 2025

Group CEO’s review

Zotefoams has delivered strong business performance, reporting a 16% increase in revenue and 20% growth in operating profit before exceptional items, both of which are at record levels for the Group. As a result of this, and our continued investment to support capacity and innovation, the Group remains well positioned to take market share and capitalise on significant opportunities in our exciting supercritical fluid foams markets

Overview

In recent years and throughout 2024, the business has comprised two distinct elements: the manufacturing and sale of specialist foams, which is well-established, profitable and growing; and the MuCell business (MEL), which, over the past 5 years transitioned into a development project focused on ReZorce^®, an innovative and sustainable barrier packaging alternative to existing composite solutions. Going forward, under my leadership, the Group will pivot from a product to an industry-led approach in order to support our wider growth ambitions.

Group revenue in 2024 was a record £147.8m, 16% higher than the previous year (2023: £127.0m), with significant growth in Footwear and modest growth in our ZOTEK^® technical foams and North American polyolefin foams businesses. This performance demonstrates the strength of our core product portfolio and the success of an industry-focused strategy. MEL, at £1.2m, was a far smaller part of Group revenue. Our operating profit growth of 20% before exceptional items was pleasingly ahead of our revenue growth and, alongside improved cash generation, the business enters the 2025 financial year well positioned for continued profitable growth.

2024	United Kingdom	Continental Europe	North America	Rest ofthe world*	Total
Change %	7%	(6%)	6%	37%	16%
Group revenue (£000’s)	12,740	30,475	28,696	75,880	147,791
% of Group revenue	9%	21%	19%	51%	100%
2023
Group revenue (£000’s)	11,879	32,514	27,195	55,387	126,975
% of Group revenue	9%	26%	21%	44%	100%

*    Rest of the world comprises China: £34.9m (2023: £27.1m) and other countries: £41.0m (2023: £28.3m).

Our business strategy targets the expanding market for differentiated, high-performance foam materials, driven by three fundamental macro-trends:

1. increasing urbanisation and ageing demographics

2. enhanced safety regulations

3. growing demand for environmental sustainability.

These trends, combined with our commitment to sustainability and safety across all operations, position us well for future growth. Building upon our century-long heritage in specialist foam manufacturing, Zotefoams is embarking on a refreshed strategy that expands beyond our core capabilities through strategic investments and deeper customer partnerships. By leveraging our supercritical fluid foam technology and investing in innovation and customer-focused manufacturing capabilities, we will strengthen our position to capture long-term growth opportunities driven by the increasing demand for sustainable, innovative, lightweight and durable materials. Our medium-term ambition is to grow Group organic revenue well in excess of £200m, operating profit in excess of £40m, cash conversion above 95% and ROCE beyond 20%.

Formative Impressions

I became Group CEO of Zotefoams in May 2024 and have spent significant time engaging with our teams, customers, and operations across the business. What I have found is a company comprised of dedicated teams with extraordinary technical capabilities and significant untapped potential for growth.

The foundation of our success lies in our talented workforce, particularly our concentration of STEM specialists, who have established Zotefoams as the clear market leader in cross-linked and low-density polyethylene block foams. This technical excellence has enabled us to build and maintain strong relationships with major Original Equipment Manufacturers across a range of sectors globally.

A key observation has been the substantial value our products generate throughout the value chain. There is a clear opportunity to better structure and formalise relationships with distributors and fabricators, potentially capturing more of this value. This forms part of a broader opportunity I see for Zotefoams to create its next growth curve by expanding further beyond our UK core base and traditional block foam offerings. With much of the required investment already made in building capacity globally, this will be a key driver in delivering profitable growth in selected high-opportunity industries.

Our technical capabilities and market position give us a strong ‘right to win’ in several exciting growth industries. Many of these are already well served by our current product base; however, there is still scope to expand in these industries. To capitalise on these opportunities, in some instances we may choose to advance along the value chain and deploy new technologies. While M&A has not historically been a core focus for Zotefoams, we have begun to develop this capability during 2024 and view it as a complementary accelerator for growth alongside organic investment and strategic partnerships. Our M&A strategy is well defined and will ensure that we remain disciplined in our approach to this growth opportunity.

Innovation will be central to our future success. Our global leadership in foaming technologies enables us to work with an extensive range of polymers – from commodity materials right through to highly engineered materials – creating both rigid and flexible foamed products that can effectively compete against traditional plastics, metals, composites, and other performance materials.

Looking ahead, I see significant runway for both revenue and margin growth. Global trends favouring clean products, lightweighting, durability, sustainability, and enhanced technical performance align perfectly with our capabilities. Our emerging technology initiatives, and associated investment priorities, including new capacity in Vietnam, are designed to bring us closer to customers and move along the value chain, while making our core supercritical fluid foams business more cost-effective and sustainable.

Strategic Market Realignment

During 2024 and into 2025, we engaged a reputable global market research organisation to help us perform an extensive market mapping study. The current core business focuses on a portion of the £4bn polyolefin foams market, with some participation in select high-performance engineered polymer foam applications. This has historically limited our addressable market to approximately £0.8bn within these segments. However, with the strategic direction we intend to take, moving along the value chain and expanding Zotefoams’ technology platforms, we can now set our sights on a significantly larger £15bn market opportunity – £4bn polyolefin and £11bn engineered polymers.

To meet this opportunity, we are implementing a shift in how we view and serve our markets. Moving beyond our traditional product-centric structure of Polyolefin Foams and High-Performance Products (HPP), we are realigning our commercial teams around three core market verticals:

– Consumer and Lifestyle – encompassing our footwear business alongside other applications in sports, leisure and personal care

– Transport and Smart Technologies – includes our aviation, automotive and medical applications

– Construction and Other Industrial – captures our growing presence in building technologies and other industrial applications

This strategic shift recognises that most of our customers can benefit from products across our entire portfolio. By organising around market verticals rather than product lines, we can better serve our customers’ complete needs and unlock additional value through our comprehensive solutions offering.

This industry-focused approach, combined with our new regional operating model, creates a powerful platform for growth. Our regional teams can now leverage our full product portfolio to provide integrated solutions within each market vertical, whilst maintaining the technical excellence that underpins our success. This structure enables us to:

– Develop deeper market understanding and customer relationships

– Create more comprehensive solutions using our entire product range

– Identify cross-selling opportunities more effectively

– Drive innovation based on industry needs rather than product capabilities

– Streamline customer engagement through single points of contact

These market verticals each contain significant sub-segments with strong growth potential. For example, Consumer and Lifestyle encompasses our footwear business alongside other applications in sports, leisure and personal care, Transport and Smart Technologies includes our aviation, automotive and medical applications, while Construction and Other Industrial captures our growing presence in building technologies and other industrial applications.

This reorganisation aligns with our strategic focus on sustainable growth and value creation, enabling us to better serve customers locally, while leveraging our global capabilities and innovations across all product technologies. We believe that this transformed commercial strategy will enable sustained organic growth well ahead of underlying markets, with a target for Group revenues to exceed £200m by 2029.  

Strategic Investment in Technology and Innovation

Zotefoams invests in assets and technology with the capability to support the growth opportunities afforded by its diverse and often unique products. During the year, we continued to pursue a strategy of mix-enrichment and increasing asset utilisation and, for the first time, revenue generated from our High-Performance Product business unit (ZOTEK and T-FIT brands) exceeded that in our Polyolefin Foams business (AZOTE). We made good progress preparing to install our second low-pressure autoclave in the USA, which will provide additional expansion capacity and supplement an aging asset in a critical region where we see significant growth opportunities. We also partnered in May 2024 with Suzhou Shincell New Materials Co., Ltd (“Shincell”) of Suzhou, China, accessing Shincell’s technology via a licensing agreement and thereby extending our technical capabilities and know-how, enabling a wider scope of products and processes in both new and existing markets and enhancing the Group’s technology platform for new products to deliver growth.

During the year, we also began the transition to a new internal, regional operating model. This model marks a fundamental shift in how we approach and serve our markets, moving us beyond our traditional product-centric structure to an industry-oriented organisation that can better capture global opportunities whilst maintaining our technical leadership. The new structure is organised across EMEA, North America and Asia and enables us to align our capabilities more closely with customer needs and regional market dynamics. There has been significant recruitment of new talent to support this reorientation, and the operating model became effective from the beginning of the new year.

This strategic evolution delivers two key advantages:

Firstly, it enables us to manage key customer relationships on a truly global scale. Many of our most significant customers operate across multiple regions and require a diverse range of material solutions, and our new structure allows us to serve them more effectively with coordinated account management and consistent service levels. This is particularly valuable in sectors such as aviation, automotive and footwear, where global programmes require seamless coordination across regions and where our customers require diverse material solutions that can be satisfied from across our portfolio of products.

Secondly, our regional model creates platforms for accelerated growth through organic expansion, partnerships and strategic M&A opportunities. Each region now has the autonomy to pursue market opportunities whilst leveraging our global leadership in technology and innovation. This structure positions us to better identify and implement downstream activities that can enhance our market presence or technical capabilities within specific regions.

Our industry approach is supported by well invested assets and capacity. We also see significant opportunity for accelerated growth through increased investment in new technology and manufacturing capabilities. A planned facility in Vietnam, alongside our existing operations in the UK, USA, and Poland, demonstrates our commitment to positioning our manufacturing capabilities closer to key customers and growth markets, which in this case is our important Footwear market, and capitalises on innovation within our own technology. Zotefoams will also establish a small purpose-built footwear innovation centre in Busan, South Korea, that will allow us to work more closely with key partners and allow a more rapid and responsive product development capability in this rapidly evolving industry. See ‘capacity and investment’ below, for further information.

Our primary focus is on driving organic growth, but we do see opportunity to use targeted M&A as a new growth lever where it meets our stringent criteria. We plan to enhance value through either market consolidation, where we expand our portfolio with complementary products, acquire technologies to deepen our expertise, or through downstream extension, where we will shorten the value chain, gain machining and processing capabilities and get closer to our customers, while respecting our existing customers, many of whom are active in this area.

Cultural Transformation

Underpinning this strategic shift is a significant cultural transformation centred on our new values of Courage, Impact and Respect. These values reflect both our heritage of technical innovation and our ambition to become an even more customer-centric organisation.

Courage enables us to challenge conventional thinking and pursue ambitious goals. This should manifest itself in developing innovative solutions for customers, entering new markets, or implementing organisational change to drive operational efficiencies. Our teams are encouraged to think boldly about how we can better serve our markets and customers.

Impact focuses our attention on delivering meaningful results for all stakeholders. Whether through product innovation, operational excellence, or customer service, we measure success by the tangible value we create. This value-driven approach guides our investment decisions and strategic initiatives across all regions.

Respect acknowledges the importance of collaborative relationships – with colleagues, customers, suppliers, shareholders and communities. In our new regional structure, this translates into stronger local partnerships and a deeper understanding of market needs, whilst maintaining strong global coordination.

These values are being embedded through comprehensive leadership programmes, regular cross-regional forums, and enhanced communication channels. Our new regional structure provides additional opportunities for career development and knowledge-sharing across markets, strengthening our global capability whilst maintaining local market expertise.

Sustainability

Sustainability remains integral to both our operations and value proposition. Our products typically serve long-term, multiple-use applications and many can be recycled at end-of-life, contributing positively to our customers’ sustainability objectives. In 2024, we observed an accelerating trend towards lighter-weight foams across several markets, particularly in our Polyolefin Foams business. This evolution aligns with our commitment to resource efficiency, reducing material usage while delivering cost benefits to our customers.

We continue to make progress against our environmental targets for Scope 1 and 2 emissions through focused initiatives in energy consumption, material efficiency, and waste reduction. In 2024, we maintained our momentum in reducing energy consumption and waste while increasing our recycling rates, often incorporating recycled material into new foam products. Our core markets increasingly demand ‘best in class’ solutions that align with our purpose of delivering optimal material solutions for the benefit of society.

Following our commitment made in 2023, we conducted a comprehensive review of our environmental strategy during our 2024 Board strategy session and are now developing science-based targets. We maintain our adherence to ISO 14021:2016 guidelines for environmental claims, ensuring independent certification where appropriate.

Notably, in 2024, 89% of our revenue came from products classified as “green” based on resource efficiency criteria, demonstrating substantial improvements in resource utilisation during either manufacture or use. This metric underscores our commitment to sustainable innovation and our ability to meet evolving market demands for environmentally conscious solutions.

Our planned investment in Vietnam is scalable and transitions manufacturing from larger flat sheets to individual 3D foam parts, which particularly suits the demands of the footwear customer, significantly reducing the skeleton of waste. Being close to the customer, it also significantly reduces transport. Our planned investment in an innovation centre of excellence in the UK will build on our supercritical fluid foaming technology, which demonstrates its green credentials through the absence of chemical foaming agents, foams that carry lighter weight and thus use less material, and forms that are durable and last longer. This facility will help us to further evolve existing technology, and invest in new technology, to reduce the energy used in manufacture and improve the Group’s sustainable offering.

Executing the strategy

We expect this strategy to grow sustainable cash flows and increase shareholder returns. We will:

– Transform from a position of strength to get closer to the customer

– Orientate our activities to where we have the greatest runway for growth and the right to win

– Innovate to create the next generation of supercritical foams, doubling down on weight and waste reduction and bringing new technical performance

– Target M&A to move the Group along the value chain and/or introduce new technology

We have invested into the Group Executive Team in order to deliver on our strategic priorities and drive profitable growth. To be fit for the future, and with a new operating model and structure realigned for growth, we will remove waste from our processes and automate, using AI where possible and appropriate. In 2025, we will target inefficiency in sales, general and administration spend as well as in indirect manufacturing overhead spend, with possible annualised savings of up to £3-4m, £1-2m of which will be reinvested in this refreshed strategy.

Through increased focus on the customer, continued commitment to innovation, expanding capability to move up the value chain and enhanced organisational execution, the Group is targeting ambitious progress in the medium term:

· Organic growth of 7% CAGR to deliver FY2029 revenue of >£200m

· Operating margin of over 18% by FY2029

· ROCE of over 20% by FY2029

· Cash conversion of >95%

These 2029 targets reflect a longer-term ambition to grow revenues to >£300m and operating profit to >£60m, with the opportunity to accelerate progress through inorganic growth.

HIGH-PERFORMANCE PRODUCTS (HPP)

ZOTEK^®

T-FIT^®

Segment revenue: £79.6m

Change +37%

2023: £58.1m

Segment profit margin: 26.9%

2023: 26.5%

Segment profit: £21.5m

Change +39%

2023: £15.4m

In 2024, our HPP business unit performed very well, with volumes up 39% and sales growing significantly to £79.6m (2023: £58.1m), after an FX headwind of £2.4m. The year marked a key milestone at Zotefoams, with sales in the HPP business unit surpassing those of Polyolefin Foams for the first time. The business unit comprises three main product groups: footwear, ZOTEK fluoropolymer foams and T-FIT technical insulation.

The footwear segment, primarily serving the performance running shoe market with specialist midsole materials, delivered robust growth with sales reaching £66.1m (2023: £45.3m), an increase of 46%. In addition to strong underlying growth in the platforms we supply foam for, this growth also benefitted from an Olympic year, supply chain reconfiguration of our end customer, a rebuild in inventory at the beginning of the year by our direct customers related to Red Sea logistical challenges and, later in the year, additional demand as Nike embarked on its strategy of building back the trust of wholesale partners in line with their CEO’s strategy. Longer term, our investment in Asia will increase our total addressable market in the footwear industry by bringing us to the heart of the athletic footwear manufacturing base, supplying 3D parts and being more cost effective by reducing customer material waste and leveraging a lower cost of production. 

Our exclusive partnership with Nike until 2029 continues to yield benefits beyond pure sales, enabling deeper collaboration on supply chain optimisation, production efficiency and environmental sustainability. A notable achievement has been the near elimination of waste in our foam production process, with most scrap in our manufacturing process being successfully reintegrated into the footwear supply chain. Our pricing mechanism with Nike maintains transparency, reflecting material input costs, production efficiencies and foreign exchange movements. We also recognise the opportunity to reduce foam waste in our Tier 1 partner manufacturing processes, which currently sits as high as 50%, and the move to a new production technique in an Asian facility will reduce this waste by as much as 90%.

Beyond footwear, our ZOTEK brand offers advanced foamed sheet materials for technically demanding applications globally. The aviation sector remains a key market, where our materials meet critical requirements for insulation and fire performance whilst minimising weight- major factors in both safety and sustainability. The portfolio serves additional sectors including space, automotive, technical packaging, military and personal protection through a diverse range of foams with specific properties, achieved through our unique combination of material selection and proprietary foaming technology.

ZOTEK F materials, our largest product offering within the portfolio, experienced a 7% increase in sales value to £7.0m (2023: £6.5m). Whilst the aviation sector, particularly Boeing, continues to face challenges despite robust order books, we anticipate significant growth as these issues resolve and we diversify our offering with other aircraft manufacturers. The high input cost inflation reported previously began to impact profitability as we consumed previously purchased inventory. We implemented pricing adjustments from 2024, carefully balancing full cost recovery against our long-term growth ambitions. ZOTEK F foam sheet sales represented 9% of HPP segment sales (2023: 11%).

T-FIT insulation, manufactured using our HPP products and specifically designed for clean processing environments, saw sales decline marginally to £5.8m (2023: £5.9m). Performance varied by region, with China showing growth in food processing but experiencing slower activity in biotech and pharmaceutical sectors, alongside lower conversion rates on larger targeted projects. India demonstrated strong growth across our portfolio. We are strengthening our position in other markets through strategic staff investments and enhanced sales processes. Our manufacturing strategy combines local production-either at Zotefoams facilities or through trusted partners-for North American and European markets, whilst our Chinese facility supplies other markets and the complete dimensional range globally. T-FIT sales accounted for 7% of HPP segment sales (2023: 10%).

Segment profit reached £21.5m (2023: £15.4m), delivering a margin of 26.9% (2023: 26.5%). The majority of the increased inventory provision made in 2024 affected slow-moving HPP foams, without which, the segment margin was 28.5%, an increase of 200 bps.

POLYOLEFIN FOAMS

AZOTE^®

Segment revenue: £66.9m

Change -1%

2023: £67.6m

Segment profit margin: 8.2%

2023: 11.1%

Segment profit: £5.5m

Change -27%

2023: £7.5m

In 2024, the Polyolefin Foams business experienced mixed performance across regions and market segments, with overall volumes showing modest growth globally. Whilst North American volumes increased by 23%, EMEA saw a decline of 5%, resulting in 4% lower overall volumes compared with 2023.

Sales performance varied significantly by region and market segment. In Europe, which represents the majority of segment sales, sales were down 8%, with performance impacted by economic headwinds, particularly in Germany where automotive and construction markets reached their lowest levels since 2008-2009. The UK showed resilience with a 4% revenue growth despite lower volumes, driven by strong average selling prices and new projects in construction and industrial applications. The Far East demonstrated robust growth with an 18% revenue increase, driven by new electric vehicle battery applications and strong performance in high-margin aviation, semiconductor, and medical segments. Overall, the EMEA region saw a 3% sales decline.

Sales in the North American business grew 3%, but there were significant shifts in market mix, with automotive volumes increasing by 55% whilst higher-margin segments such as medical and military experienced declines. The medical segment faced temporary challenges due to inventory adjustments at key customers, whilst military sales were impacted by reduced aircraft production schedules and lower demand for specialised products. The outlook for these segments as we head into 2025 is more positive.

The main polymers used in our Polyolefin Foams business are low-density polyethylene (LDPE) and other similar polyolefins. During the year, the price of LDPE held steady at 2024 levels and in Europe was trending around its long-term average when the turbulence of the COVID years is excluded. LDPE pricing is related to the pricing of its feedstock and ethylene, and the regional supply vs demand balance.

In 2024, profitability was impacted by product mix as well as increased operational costs, particularly in labour and maintenance. Labour costs increased due to inflation, with salary increases averaging 7% in EMEA, and strategic additions to our workforce, where the Group made significant staffing investments in North America to support increased production capabilities, volumes and quality initiatives to ensure we are well placed to capture the growth opportunities in this region.

Manufacturing efficiency continued to be a focus across all facilities. We manufacture polyolefin foams in three facilities, with full-process manufacture in the UK and USA and foam expansion, fabrication and logistics in Poland. An increasing proportion of European business is served through our Polish facility, which is now operating 24 hours, six days per week. In North America, additional production supervisors and fabrication operators were added to support increased demand in specialised segments, and staffing levels at our fabrication facility in Tulsa were increased to support an extension to our service offering, while both UK and US facilities focused on continuous improvement initiatives.

Segment profit for Polyolefin Foams declined by 27% to £5.5m and margin fell from 11.1% to 8.2%. However, several positive developments emerged, including new project wins in the UK that are expected to continue into 2025, strong growth in high-value applications in the Far East, and improved operational capabilities across our manufacturing network.

Looking ahead, our focus remains on optimising our product mix, continuing operational improvements, and capitalising on growth opportunities in emerging applications, particularly in the electric vehicle and specialised industrial segments. The business maintains a strong foundation for future growth, supported by our global manufacturing footprint and diverse market presence. Our new regional operating model will enable better market responsiveness and customer service, whilst our continued investment in manufacturing efficiency positions us well for margin recovery as market conditions improve.

MEL

In December 2024, following a comprehensive strategic review, we made the decision to pause investment in ReZorce circular technology to focus our resources and innovation capabilities on our core supercritical fluid foams business, where we see substantial opportunities for growth and value creation.

During 2024, the Group achieved several important technical milestones with ReZorce and produced an award-winning beverage carton capable of being run at full industrial speed through existing production machinery. Validation that the packaging was food sterile was still pending, but the route to this was clear and considered readily attainable, albeit requiring more time to complete. 

This disruptive technology had demonstrated compelling sustainability credentials, including potential carbon footprint reductions of over 50% for commonly packaged foodstuffs. Despite these achievements and an extensive process across the value chain to secure a strategic partner, supported by specialist advisers, we did not identify a partner prepared to advance the technology. Given the capital investment, market access and expertise required to achieve high volume production of finished packaging, the Board had consistently believed that a strategic partner was necessary to realise the commercial potential of the ReZorce technology. Based on the feedback from this process we concluded that the inherently low visibility over factors such as pricing, within the overall evolution of the packaging market, when set against the capital commitments required, was the principal reason why the process had been unsuccessful.

The intellectual property and know-how associated with ReZorce remains well protected and will be retained by the Group in order to preserve its ability to realise the value of the unique technology, should market conditions become more favourable.

Revenue from our MEL business unit remained at £1.2m (2023: £1.2m), while the segment loss before amortisation of acquired intangibles increased to £4.6m (2023: £4.1m). Following this strategic decision, we have recognised a non-cash asset impairment of £13.8m and provided for related closure costs of £1.4m and treated the combined amount of £15.2m as exceptional items in the 2024 financial statements.

Going forward, small revenue streams from royalties at existing customers of MuCell Extrusion LLC will continue, and costs will include those to protect patents considered of value. An agreement with Censco LLC will see MEL equipment assembled and sold globally by Censco, for which royalty payments will be received.

Capacity and Investment

Our manufacturing excellence is built on three core processes: polymer sheet extrusion, high-pressure nitrogen gassing, and controlled expansion. This specialised infrastructure represents a significant competitive advantage, supporting multiple production lines and enabling flexible manufacturing across our product portfolio.

In the UK, our investment strategy is targeted at driving operational excellence through cost reduction and efficiency improvements, directly supporting our sustainability goals. The UK facility remains our centre of excellence for HPP products and serves as a strategic hub for preliminary production of certain polyolefin products, which are then finished in Poland to optimise logistics and reduce environmental impact. A new innovation centre of excellence is being established in the UK to develop platform technologies that can be implemented across industries, providing the next generation of industry solutions; it will work hand-in-hand with the footwear innovation hub in Asia. The UK innovation centre of excellence will protect our know-how and trade secrets, give us access to great talent and will build on a strong legacy of material and process innovation. We will evolve current, and invest in new, technology to reduce the energy of manufacture and improve our sustainable product offering. It will also enable us to design products and processes that significantly reduce waste and emissions along the value chain while delivering even greater performance characteristics.

Activity in our Polish facility increased significantly in 2024, with the capacity being used to support growth in both polyolefin foams and high-performance product lines. In 2025, we will continue to drive up utilisation of this investment and assess how this modern facility with a well-skilled workforce can contribute further to the refreshed Group strategy.

We are executing an expansion strategy in the USA, where market opportunities are compelling. Our £10m investment in a second low-pressure autoclave, alongside upgraded systems and expanded warehousing, is progressing on schedule for early H2 2025 completion. This investment will significantly enhance our capacity and operational resilience in this key market.

As announced on 10 March 2025, the Board has approved strategic investments in Vietnam and Korea to support our growing Footwear business, positioning us closer to key end markets and customers. This investment represents a transformative move to secure our position as Nike’s key, high-end, foam technology partner. Vietnam, a global hub for athletic footwear manufacturing, offers proximity to customers, faster lead times and reduced environmental impact through shortened supply chains and a significant reduction in material waste. Innovation of the Group’s own manufacturing core technology will enable the £24m Vietnam facility to offer additional footwear capacity with improved flexibility, allowing modular increments, faster implementation and a lower cost than previous builds. The investment will create a state-of-the-art manufacturing facility capable of initially producing approximately 10 million pairs of midsole preforms annually. A £2m, cutting-edge innovation centre in South Korea will provide a platform to showcase Zotefoams’ unique technology and enable a more rapid and responsive product development capability in a fast-moving industry. The total investment in these facilities will be spread across 2025 (c.£8m), 2026 (c.£11m) and 2027 (c.£7m) and be funded from the Group’s existing financing facilities and cash flow. These investments secure our Nike partnership and establish a foothold in Asia’s broader manufacturing ecosystem for future growth.

Measuring Strategic Progress

We track five key metrics that drive value creation:

1.	Product Mix Enhancement: 2.8% improvement in adjusted average selling price (2023: 2.7%), reflecting success in growing our higher-value portfolio
2.	Asset Optimisation: 5.6% improvement in asset utilisation (2023: 2.6%), supported by a 2.1% increase in effective capacity (2023: 1.5%) through manufacturing efficiency gains
3.	Margin Development: Operating margin before exceptional items, increased 40 bps to 12.3%, supported by HPP growth and manufacturing efficiencies. Operating margin for our core business (excluding MEL) increased 20 bps to 15.7%. Our medium-term ambition for operating margin is to surpass 18%.
4.	Capital Efficiency: Return on average capital employed (ROCE), which excludes the exceptional items, increased to 11.7% (2023: 10.3%). Removing MEL, ROCE increased to 16.0% (2023: 14.2%). Additionally, working capital now represents 33% of net sales, down from 41% in 2023, reflecting enhanced management of receivables, inventory, and supplier terms. Our medium-term ambition for ROCE is to surpass 20%.
5.	Sustainability Leadership: Environmental sustainability remains fundamental to our strategy, with ESG metrics integrated into our financing arrangements and robust internal target

People

Safety remains our highest priority. While we experienced four reportable incidents in 2024, our overall safety metrics continue to outperform industry benchmarks by approximately 66%. Each incident has been thoroughly analysed, with corrective actions implemented and reviewed at Board level.

We are strengthening our culture through enhanced employee engagement, including the launch of our new corporate values and regular executive leadership team townhalls across all regions. Our ambition to achieve Great Place to Work accreditation underscores our commitment to creating an exceptional workplace environment.

On behalf of the Board and my executive colleagues, I extend sincere thanks to all Zotefoams employees and their families for their dedication and support throughout the year.

Forward-looking Statements

Forward-looking statements have been made by the Directors in good faith using information available up until the date they approved these preliminary results.

Current Trading and Outlook

We have made a positive start overall to 2025, with our Consumer & Lifestyle and Transport & Smart Technology verticals performing well across all regions. Demand in our Construction & Other Industries vertical remains more subdued, as expected, but we continue to anticipate some improvement in conditions as the year progresses.

We have set out, and are executing, a refreshed, focused strategy, prioritising innovation and profitable growth. Our market realignment is progressing well as we transition from a product-centric to an industry-led approach. Our investment in manufacturing excellence is advancing, with continued good progress towards completion of our £10m expansion in the USA, which remains on schedule for early H2 2025 commissioning, and we are commencing with investments in our innovation centre of excellence in the UK, our innovation hub in South Korea, and our new manufacturing facility in Vietnam.

The emerging trade landscape, including recent trade tariffs, creates both challenges and opportunities for Zotefoams. While these may impact global supply chains and market dynamics, our diversified manufacturing footprint across the UK, USA, Poland and, soon, Vietnam positions us well to navigate these uncertainties and potentially capture market share from less adaptable competitors.

Our new regional operating model, launched at the start of 2025, structures our business across EMEA, North America, and Asia. This enables us to better serve our customers’ complete needs through a global commercial team that coordinates decisions worldwide, while execution and delivery happens regionally. This product-agnostic approach creates a platform for accelerated growth. In 2025, we will target inefficiencies in overheads, with identified annualised savings to be in part reinvested in our refreshed strategy.

Polymer and energy input prices remain relatively stable; however, we are monitoring these closely for the impact of tariffs, and our focus on improved asset utilisation, product mix, price increases and operational efficiency continues to be our key driver of margin enhancement.

While we remain mindful of the uncertain economic backdrop and the evolving trade landscape, we are confident in our ability to deliver another year of good progress for Zotefoams. With a refreshed strategy and investment in significant growth enablers underway, we are excited by the potential for the Group to deliver both on its medium-term targets and longer-term ambition.

Ronan Cox

Group CEO

18^th March 2025

Zotefoams ploc (LON:ZTF), a world leader in supercritical foams, has announced its plans to expand its international footprint through the establishment of new, purpose-built manufacturing and innovation facilities in Vietnam and South Korea, respectively.

Over the past nine years, the Group has built a significant position in the athletic footwear market, underpinned by a strong partnership with Nike, who uses Zotefoams’ supercritical fluid foams in a number of its premium shoe programmes. This partnership has resulted in annual footwear revenues growing to over £65m in 2024, representing the largest market for the Group.

The longer-term potential for growth in footwear is substantial and the Board believes that to capitalise on this opportunity fully, the Group requires additional dedicated manufacturing and innovation capability located close to customers’ supply chains. Being able to manufacture locally, in addition to existing production in the UK, brings a number of clear benefits to the Group including strengthened customer relationships, lower production and transport costs, and significantly improved sustainability metrics. Innovation within the Group’s own manufacturing technology will enable this additional capacity to be delivered through a process which offers improved flexibility when compared to existing facilities.

Alongside the investment in additional manufacturing capability, the Group is establishing a small purpose-built footwear innovation centre in Busan, South Korea. This leased facility will not only provide a platform to showcase Zotefoams’ unique technology within the region’s R&D hub but will enable a more rapid and responsive product development capability in a fast-moving industry.

The total cost of the new manufacturing and innovation facilities is expected to be approximately £26 million and generate a strong return on investment, alongside the strategic benefits. This investment is to be made over the next three financial years and will be funded entirely from existing facilities and within the Group’s target leverage levels. A leased facility close to Ho Chi Min City, Vietnam, will be selected shortly and the fitting out will begin in Q2 2025, with commissioning expected in 2027.

Evolving the Group’s operational footprint represents a key pillar in delivering its long-term growth strategy, which includes adapting the Group’s technology to produce precision 3D parts that will reduce production waste and improve cost efficiency and value for customers. This investment aligns with the Group’s strategic focus on getting closer to customers, delivering more sustainable and innovative solutions, and substantially enlarging our addressable market within the athletic footwear sector and beyond.

The Group looks forward to providing more detail on this at the forthcoming Capital Markets Day on 18 March 2025.

Ronan Cox, Zotefoams plc CEO said: “This investment in Asia marks a pivotal moment for Zotefoams, positioning us at the heart of the global athletic footwear ecosystem. By establishing manufacturing in Vietnam and innovation capability in South Korea, we are transforming our ability to serve this market with greater speed and innovation. Our new 3D parts manufacturing will significantly reduce production waste, while our proximity to key hubs will accelerate development cycles. Our strong partnership with Nike provides the foundation for growth across its running portfolio and into additional footwear categories. This expansion reflects our confidence in the substantial growth potential of our footwear business and our commitment to maintaining our technology leadership in order to deliver attractive returns for our shareholders.”

Zotefoams plc (LON:ZTF), a world leader in supercritical foams, has provided a trading update for the Group’s financial year ended 31 December 2024 (unaudited).

The Board is pleased to report that, following a strong performance in Q4, the Group expects to report full year revenue of £147.8m (2023: £127.0m). This is slightly ahead of current market expectations and represents a significant increase (+16%) compared with the prior year.

Adjusted profit before tax¹ for the year is expected to be £15.6m (2023: £13.1m), up 19%, which is a Group record and also ahead of current market expectations.²

The improved profit performance comprises two distinct elements:

·	An 18% increase in the combined profitability of polyolefin and HPP business units (the “foams business units”) to £20.3m (2023: £17.2m), led by 46% growth in Footwear sales and further progress on efficiency savings, and after a £1.0m inventory provision following an in-depth assessment of recoverability
·	An adjusted segment loss of £4.7m in the MuCell Extrusion (MEL) business unit (2023: £4.1m loss), reflecting Group expenditure during the year to progress the ReZorce® circular packaging opportunity, which has now ceased

Year-on-year performance for the Group’s core foams business units were as follows:

·	37% growth in High Performance Product (HPP) sales to £79.7m (2023: £58.1m), led by the Footwear performance
·	AZOTE® polyolefin sales were down 1% to £66.9m (2023: £67.6m), reflecting weaker market conditions in a number of industrial markets

In December, the Group announced its intention to cease investment in ReZorce, having been unable to secure an investing partner to realise the commercial potential of the technology. While this was disappointing, and the Board continues to believe in the potential for this technology, it will allow the Group to focus resources on opportunities in the core foams business units, where the Board sees significant opportunity. The MEL business unit assets will be impaired and closure costs of up to £1.5m accrued, which will be accounted for as an exceptional item in our 2024 results.

Zotefoams is currently investing approximately £10m in a second low-pressure vessel and related additional warehouse space at its US subsidiary, to increase capacity and reduce reliance on the current vessel which was installed in 2000. The process is on track and to budget, with expected commissioning in H2 2025.

The Group balance sheet remains strong, with significant financial headroom and a year-end leverage multiple³ expected to fall to approximately 0.9x (2023: 1.2x), affording flexibility to execute on our strategic plans.

Commenting on the update 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.

“Building upon our century-long heritage in specialist foam manufacturing, Zotefoams is expanding beyond our core capabilities through strategic investments and deeper customer partnerships. By leveraging our supercritical foam technology and investing in innovation and customer-focused manufacturing capabilities, we will strengthen our position to capture long-term growth opportunities driven by the increasing demand for sustainable, innovative, lightweight and durable materials.”

¹ The adjustment to reported numbers is related to amortisation on acquired intangibles of £0.3m (2023: £0.3m), exclusively from MuCell Extrusion LLC and the exceptional item arising from the impairment of MEL

² Zotefoams-compiled consensus expectations, for the year ending 31 December 2024, are £145.5m for net revenue and £14.9m for adjusted profit before income tax as at 22 January 2025

³ Leverage multiple is calculated as Group net debt divided by EBITDA (before exceptional items), where Group net debt is adjusted from IFRS by the impacts of IFRS2 and IFRS16 under the bank facility definition.

Notice of Capital Markets Day

Zotefoams intends to hold a capital markets day for analysts and institutional investors at 2.30pm on Tuesday 18 March 2025 at the offices of Peel Hunt, its joint broker. Ronan Cox, CEO, and Gary McGrath, CFO, will be joined by other members of the senior leadership team to provide insights into the Group’s business units and key growth drivers. Parties interested in attending are requested to contact IFC Advisory on [email protected].

Notice of results

The Group expects to publish its preliminary results for the year ended 31 December 2024 on Tuesday 18 March 2025.

Zotefoams plc (LON:ZTF), a world leader in supercritical foams, has provided an update on ReZorce^® circular packaging technology and confirms trading comfortably in line with market expectations for the full year.

Update on ReZorce

As previously reported, the Group has been seeking to commercialise its fully recyclable mono-material barrier packaging solution, ReZorce. This proprietary technology has clear circularity and sustainability benefits and has generated significant interest from global food & beverage and packaging businesses.

During 2024, the Group achieved several important technical milestones and has now produced an award-winning beverage carton capable of being run at full industrial speed through existing production machinery. Validation that the packaging is food sterile is still pending, but the route to this is clear and considered readily attainable, albeit requiring more time to complete.  

Given the capital investment, market access and expertise required to achieve high volume production of finished packaging, the Board has consistently believed that a strategic partner is necessary to realise the commercial potential of the ReZorce technology. As previously reported, the Group has been actively seeking a potential partner, supported by specialist external advisers. While this process has been extensive and included engagement with parties across the value chain, it has not identified a partner prepared to take the ReZorce technology forward at this time. Based on the feedback from this process, the Board believes that the inherently low visibility over factors such as pricing, within the overall evolution of the packaging market, when set against the capital commitments required, is the principal reason the process has been unsuccessful. 

Having concluded that it will not be possible to identify a strategic partner at this time, the Board has decided to pause its investment in ReZorce and focus all of the Group’s resources on the near-term opportunities in the core supercritical foams businesses. The intellectual property and know-how associated with ReZorce is well protected and will be retained by the Group in order to preserve its ability to realise the value of this unique technology, should market conditions become more favourable. The Group will, however, initiate a process to wind down the operations of its MuCell business unit (MEL), which includes both ReZorce and the operations related to MuCell Extrusion LLC.

The exit from these activities is expected to reduce ongoing Group overheads and will allow resources to be re-deployed into the foams businesses, but will result in an impairment of the carrying value of associated assets¹ and one-off closure costs of up to £1.2m, both of which will be recorded as an exceptional item in 2024.

Update on Trading

Further to the announcement of 4 November, Zotefoams has continued to deliver a strong financial performance in a volatile market and the Board is confident that the Group will deliver a full year adjusted profit performance comfortably in line with the guidance provided at that time². Both foams businesses are performing well, and our order book remains robust with good visibility into next year. The decision to pause ReZorce and exit MEL is not expected to impact the Group’s ability to achieve current market expectations for future performance.

Commenting on the update Ronan Cox, Group CEO of Zotefoams, said: 

“Given how the unique aspects of, and the opportunity from, ReZorce are significant, it is disappointing that we have not been able to find a partner able to commit to this truly disruptive technology capable of giving consumers a recyclable and circular packaging solution.

“We continue to believe in the potential for this technology, but equally need to ensure that the Group has the focus and resources available to maximise the significant potential that we see in our core businesses. As evidenced by their continued strong financial performance, our supercritical foams businesses are well-placed to leverage their market leading positions and capitalise on long-term structural growth trends. This decision will allow us to redirect the considerable financial resources that we have been dedicating to the ReZorce project to focus on the exciting opportunities we have within the core Zotefoams business, and we will be sharing our plans in this regard at a capital markets day expected early in 2025.”

1.	As at 30 June 2024, the net asset value associated with the MEL business unit was £15.1m
2.	Current Zotefoams-compiled consensus expectations for revenue is £145.5m and adjusted profit before income tax and separately disclosed items, for the year ending 31 December 2024, is £14.9m.

Zotefoams plc (LON:ZTF), a world leader in supercritical foams, has provided a trading update for the nine months ended 30 September 2024 and in respect of its financial year ending 31 December 2024.

The Group’s strong performance announced at the interims has continued into Q3, with year-to-date sales up 23% to £110.7m against the comparative prior year period (YTD 2023: £90.3m).

Q3 sales were up 54% to £39.7m (Q3 2023: £25.7m) against a relatively weak prior year comparator. Q3 volumes increased significantly year-on-year in both Footwear and ZOTEK^® technical foams, alongside solid growth in polyolefin foams, while T-FIT^® advanced insulation saw reduced volume from a small base. On a year-to-date basis, Footwear volumes were up 60% against the prior year comparative, benefiting from an Olympic year, the addition of basketball sales, and increased orders from Tier 1 suppliers resulting from a rebuilding of inventory. Volumes in ZOTEK were up 29% and T-FIT up 1%. Polyolefin foams volumes were up 1% overall, as a 6% decline in EMEA, mostly in Germany, has offset 18% growth in the USA.

Q3 Footwear revenue, which represented 48% of sales in the period (Q3 2023: 32%), was higher than anticipated as ongoing supply chain re-configuration at the Group’s largest customer led to a continuation of elevated short-term demand for our foams. As described in the interim results, we expect the exceptional level of demand in Footwear to return to normalised patterns during 2025. Over the longer term, our customer’s evolving supply chain structure may present further growth opportunities for the Group, and we are engaging with them to assess how Zotefoams is best positioned to support and build on its strong Footwear offering.

Strong margins have been maintained year to date, with the Group’s ongoing focus on effective pricing and mix improvement and a normalisation of operating costs offset by higher people costs from inflation-linked pay increases and further investment in our wider geographic footprint.

Zotefoams has continued its investment in the development of ReZorce^® recyclable barrier technology, with year-to-date operating costs slightly higher than the prior-year comparative period. We continue to work towards the key technical milestones, including endurance and sterility testing, which we are targeting to complete before the year end. The commercial scale production of ReZorce requires significant capital investment and, therefore, the priority of the Board and executive management has been to find a strategic partner that will enable the commercial development of this transformative technology. The process to identify a such a partner has been underway since May this year and we will provide a further update to the market when appropriate.

Outlook

With the exception of T-FIT, which is generally heavily weighted to Q4, the Group has good visibility of confirmed orders across most business units for the remainder of the year. As a consequence, and while we remain mindful of the risk of some continued demand volatility in certain sectors, we expect to deliver significant revenue growth in 2024 over 2023.  

Across our two foams business units, margins are expected to be in line with the prior year, with mix and growth benefits offset by our investment in Shincell and increased people costs.

In our MEL business unit, the full year loss will be slightly above that of the previous year, as expected, reflecting further ReZorce development costs.

The Board is confident in the Group’s ability to carry positive momentum through the remainder of the year. Based on its current sales forecasts and foreign exchange rates, and subject to there being no material disruption to the business, it expects revenue and adjusted profit before tax to be in line with current market expectations.*

Commenting on the update Ronan Cox, Group CEO of Zotefoams, said: 

“As world leaders in supercritical foams, our positive Q3 performance further validates the strength of our core technology and market position. The 23% year-to-date sales growth demonstrates our ability to leverage this foundation across multiple markets, particularly evident in our exceptional Footwear performance and continued progress in technical foams.

We are building from this position of leadership and technical excellence to expand our reach and impact. The recent technical agreement with Shincell represents an important strategic step, enhancing our capabilities in the footwear market and providing new opportunities to extend our manufacturing footprint internationally. We are also strengthening our organisation with key appointments expected by the year end that will accelerate our transition to a market-led approach, allowing us to identify and capture new opportunities that build naturally from our core capabilities.

While we continue to progress the development of ReZorce and explore potential strategic partnerships for its commercialisation, our primary focus remains on expanding our leadership in our core supercritical foam technologies, where we see significant growth opportunities. This focus, combined with increased investment in innovation and operational excellence, will enable us to extend our leadership in supercritical foams into adjacent markets and applications.

Looking ahead, our order book provides good visibility for the remainder of 2024. While we expect Footwear demand to normalise during 2025, we are actively engaging with our key footwear customer to capture emerging opportunities from their evolving supply chain strategies. Despite ongoing inflationary pressures, our operational discipline and market leadership continue to deliver value. As a result, the Board remains confident in its ability to meet market expectations for the full year.”

* Current Zotefoams-compiled consensus expectations for revenue is £145.5m and adjusted profit before income tax and separately disclosed items, for the year ending 31 December 2024, is £14.9m.

Zotefoams plc (LONZTF) ReZorce® Circular Packaging has achieved a major milestone by securing the Gold Award for Sustainability at the 2024 German Packaging Prize competition awarded by the Deutsche Verpackungsinstitut. This award highlights the breakthrough nature of ReZorce, a fully recyclable mono-material packaging solution. Engineered for industries such as food and beverages, it uses up to 100% recycled content while integrating into existing recycling streams, offering an eco-friendly alternative to conventional composite liquid cartons.

The award underscores the product’s significant environmental impact, particularly in reducing energy consumption, water use, and greenhouse gas emissions. ReZorce has been rigorously tested for functionality, including its barrier properties against oxygen, water vapour, and other gases, which are key for preserving products like milk, juices, and personal care items. It is especially relevant as brands and manufacturers face increasing pressure to comply with Extended Producer Responsibility (EPR) regulations, which hold companies responsible for the end-of-life management of their packaging.

Additionally, ReZorce’s design aligns with the principles of a circular economy by being recyclable in existing waste streams. Its use of post-consumer recycled materials further decreases reliance on virgin resources, enhancing its appeal to environmentally conscious brands and consumers. This packaging innovation not only meets current sustainability targets but also offers cost efficiencies in compliance with EPR schemes. As a result, brands adopting ReZorce could see reductions in material fees, collection, and recycling costs, while contributing to a reduced carbon footprint.

Zotefoams plc, a company known for its advanced cellular materials, has integrated its expertise to make ReZorce an attractive alternative to traditional packaging solutions. The recognition from the German Packaging Prize validates Zotefoams’ positioning as an innovator in sustainable packaging, and with growing market interest in environmentally friendly solutions, the company is well-positioned for future growth. Investors should take note of ReZorce’s potential to capture market share, as industries across the board are expected to increase demand for sustainable, compliant packaging options. The ReZorce platform not only meets these demands but provides a scalable, economically viable solution that could drive long-term growth for Zotefoams.

The success of ReZorce Circular Packaging at the German Packaging Prize positions Zotefoams at the forefront of sustainable packaging innovations. With the continued rise of regulatory pressures and consumer demand for eco-friendly products, this award-winning packaging technology highlights an important growth avenue for the company and provides a compelling opportunity for investors focused on long-term sustainability trends.

Zotefoams plc (LON:ZTF), a world leader in cellular materials technology, has announced its interim results for the six months ended 30 June 2024.

Results highlights

·	Record H1 sales performance, with Group revenue up 10% to £71.1m (HY 2023: £64.6m) and by 13% at constant currency
	– High-Performance Products (HPP) revenue up 37% to £36.1m (HY 2023: £26.4m)
·	Record H1 earnings and continuing improvements in profit margins
	– Gross margin up 40 bps to 33.2% (up 50 bps to 34.3% excl. MEL)
	– Profit before tax up 12% to a record £8.3m (HY 2023: £7.4m)
	– Profit before tax excl. MEL up 12% to a record £10.5m (HY 2023: £9.4m)
·	Basic earnings per share up 12% to 12.89p (HY 2023: 11.53p)
·	Strong balance sheet
	– Improved cash generation from operations of £8.5m (HY 2023: £5.8m) supporting higher levels of growth investment
·	Interim dividend increased by 4.4% to 2.38p per share (2023: 2.28p per share)

Strategic highlights

·	Continued strong performance in Footwear, driven by our partnership with Nike
·	Significant progress in ReZorce®, a transformative opportunity for the consumer packaging market with our recyclable barrier packaging technology. Our initial target market is liquid paperboard (LPB) cartons, where an estimated 300 billion cartons are currently made globally per annum
	– Announced Refresco, the world’s largest independent beverage packager, as joint development partner.
	– Preparing for market trial of 150,000 sterile juice cartons in Western Europe
	– Exploring strategic investment partnership during H2 2024 to facilitate the scale-up and delivery of the ReZorce solution globally
·	Future organic growth in North America supported by capital investment on a second low-pressure vessel on track for mid-2025 commissioning
·	Expanded technical capabilities and growth potential in new and existing markets through global alliance agreement signed with Suzhou Shincell New Materials Co. Ltd., China

Financial summary

		June 2024	June2023	Change
Revenue (£m)		71.1	64.6	10%
Gross margin (%)		33.2	32.8	40 bps
Operating profit1 (£m)		9.7	8.5	14%
Operating margin (%)		13.6	13.1	50 bps
Profit before tax1 (£m)		8.3	7.4	12%
Basic EPS1 (p)		12.89	11.53	12%
Net debt (£m)		44.6	28.3	(58%)
Net debt (£m) covenant basis2		35.1	26.7	(31%)
Leverage ratio3		1.4	1.1	–
Interim dividend (p)		2.38	2.28	4.4%

¹ This is a reported number under UK adopted IAS and is after the deduction of amortisation of acquired intangibles amounting to £0.126m (HY 2023: £0.131m)

² Net debt (covenant basis) is that defined under the bank facility, adjusted for the impact of IFRS16. The main adjustment is the elimination of Shincell (£7.1m), treated as a right-of-use asset and a corresponding lease liability

³ Leverage is not an IFRS measure and is that defined under the bank facility, with net debt, adjusted for IFRS16, at the end of the period divided by the preceding 12 months’ EBITDA, adjusted for IFRS2 and IFRS16

Commenting on the results and the outlook, Ronan Cox, Group CEO, said:

“I am pleased to report a strong first half performance for Zotefoams, demonstrating the resilience and growth potential of our business. Group revenue grew by 10% to £71.1m, driven primarily by exceptional demand from Nike, where underlying platform growth was amplified by an Olympic year and inventory build at Tier 1 suppliers. Coupled with our focus on operational efficiency, we achieved an increase in profit before tax of 12% to a record £8.3m (HY 2023: £7.4m). This figure includes cost an operating loss of £2.2m (HY 2023: £2.0m) in our MEL business as we progress our ReZorce recyclable barrier packaging technology.

ReZorce is a transformative opportunity for the consumer packaging market. In May, we announced Refresco, the world’s largest independent beverage packager, as our joint development partner, generating significant industry interest globally. We are now preparing for a trial of sterile juice cartons in Western Europe and in parallel are holding discussions with potential strategic partners to drive this initiative forward.

In May, we signed a global alliance agreement with Shincell, that combines our century of experience in nitrogen-expanded foams with their innovations in foaming technology. It enhances our technical capabilities and allows us to leverage their technology to get closer to our key customers and enter new markets, further strengthening our competitive position.

We enter the second half with positive momentum and with the expectation that market trends seen in H1 will remain largely consistent going into the latter part of the year. Footwear demand is expected to normalise over the coming months, as some of the near-term factors benefiting H1 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.

The Board is delighted with the Group’s continued progress, with the benefits of our 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.”

Zotefoams plc (LON:ZTF), a world leader in cellular materials technology, has provided 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, 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, 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.

At a media launch to be held in Amsterdam today, Zotefoams plc (LON:ZTF), a world leader in cellular materials technology, will provide an update on the progress of ReZorce^®, the Company’s mono-material barrier packaging substrate, in beverage carton applications.

The keynote speaker at the event will be Paul Polman, former CEO of Unilever, a globally recognised voice on sustainability in business.

The Company will be joined by Refresco, the world’s largest independent beverage solutions provider for leading retailers and A-brands with production in Europe, North America and Australia. Further to the announcement of 18 July 2023, the Company has been working with Refresco, as its joint development partner, on the commercialisation of ReZorce and a planned in-market trial.

At the event, Zotefoams will report good progress towards commercialisation of ReZorce beverage cartons. Functional cartons are now being produced at one of Refresco’s facilities in Europe. This represents a number of significant technical milestones associated with the transition from liquid packaging board (“LPB”) to ReZorce in the production process and most notably that a filling line designed for LPB can be readily modified to accommodate ReZorce.

Zotefoams and Refresco are now initiating quality and compliance testing procedures required for commercial production of beverage carton applications aiming for a trial market launch with a European retailer.

The Company is continuing to evaluate a range of options to best capitalise on the significant potential of this proprietary technology. As previously guided, the Board believes that an investment partner for ReZorce may help accelerate and de-risk any potential scale-up and, in light of the progress made to date, will explore this over the coming months. At the end of this process the Board will update shareholders on its evaluation of the optimal path to realise value.

In conjunction with its Annual General Meeting, Zotefoams will announce a trading update on 22 May, followed that morning by an investor presentation on the Investor Meet Company platform (https://www.investormeetcompany.com/zotefoams-plc/register-investor). Investors who already follow Zotefoams on the Investor Meet Company platform will be invited automatically.

David Stirling, Group CEO at Zotefoams, comments, “The announcements we are making today are indicative of the gathering momentum on this project. We are proud that Refresco, a world leader in its field, has recognised the potential of ReZorce and has chosen to partner with us to accelerate its commercial launch.

“We are delighted to have reached this milestone, which clearly demonstrates that ReZorce is progressing well towards becoming a fully commercialised product that is scalable with existing infrastructure.

“Retailers and brand owners understand the need for a sustainable alternative to LPB cartons and ReZorce meets that need: it is fully recyclable via mainstream collections, contains recycled material in line with the thresholds set out in the EU Packaging and Packaging Waste Directive and has a lower carbon footprint.”

Zotefoams plc (LON:ZTF), a world leader in cellular materials, has announced that it has signed a Global Alliance Agreement with Suzhou Shincell New Materials Co., Ltd of Suzhou, China.

Shincell and Zotefoams are industry-leading foaming companies with complementary technology and market interests. This global alliance matches Zotefoams’ 100-year history in nitrogen-expanded foams with Shincell’s latest innovations in foaming technology. 

Shincell, based in Suzhou, China, was founded in 2019 by Dr Xiulei Jiang, who has over 20 years’ experience in physical-gas foaming research and technology. Shincell is a company dedicated to developing sustainable foaming technologies and manufacturing clean, environmentally friendly lightweight foam materials. The company uses nitrogen and carbon dioxide gases commonly found in the air to expand plastics and form a large number of micro and nano bubbles inside, a purely physical foaming process.

The alliance consists of agreements on technology licensing from Shincell to Zotefoams, development and market co-operation, and regional product distribution agreements, where certain products from Shincell’s unique technology will be marketed alongside Zotefoams’ existing and future product range. With a shared commitment to sustainability and innovation, the two companies will co-operate on product development and are confident that this alliance is a significant step forward for the foaming industry.

Shincell’s complementary technologies extend Zotefoams technical capability, enabling a wider scope of products in both new and existing markets and enhancing the Group’s technology platform for new products to deliver growth.

Zotefoams will pay technology licensing fees of RMB 80million (approx. £9m, including capitalised deal costs*) over the 5-year term of the agreement, which will support the further development of the technology and Shincell business.

Dr Jiang, Shincell CEO, comments, “This alliance is a great example of combining cutting edge foaming technology and global marketing expertise to not only enhance innovation efficiency but push environmental awareness to a higher level. We are very optimistic that the collaboration with Zotefoams will bear more sustainable fruits.”

David Stirling, Zotefoams Group CEO, comments, “I am very impressed by Dr Jiang and the technology developed by his Shincell company. Their goal of environmentally friendly foaming using physical blowing agents aligns perfectly with Zotefoams’ vision and markets. This alliance is an exciting opportunity to enhance the growth potential of our specialist foams business with sustainable solutions.”

* Zotefoams policy for amortisation of technology-related intangible assets can be found in Note 2.(vi) of the 2023 Annual Report

Zotefoams plc (LON:ZTF) has published its 2023 Annual Report and the Notice of the 2024 Annual General Meeting to be held at 675 Mitcham Road, Croydon CR9 3AL on 22 May 2024 at 10.00 a.m.

Annex A

Statement of Directors’ responsibilities in respect of the financial statements

The Directors consider the Annual Report, taken as a whole, to be fair, balanced and understandable.

The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the Directors to prepare financial statements for each financial year. Under that law, the Directors have prepared the Group and Company financial statements in accordance with UK-adopted international accounting standards. Under company law, the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and of the profit or loss of the Group and Company for that period. In preparing the financial statements, the Directors are required to:

·	Select suitable accounting policies and then apply them consistently
·	State whether applicable UK-adopted international accounting standards have been followed subject to any material departures disclosed and explained in the financial statements
·	Make judgements and accounting estimates that are reasonable and prudent and
·	Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and Company will continue in business.

The Directors are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements and the Directors’ Remuneration report comply with the Companies Act 2006.

The Directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the position and performance, business model and strategy of the Group and Company.

Each of the Directors, whose names and functions are listed on pages 78 and 79 of the Annual Report, confirm that, to the best of their knowledge:

·	The Consolidated and Company financial statements, which have been prepared in accordance with UK-adopted international accounting standards, give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company and
·	The Group CEO’s review includes a fair review of the development and performance of the business and the position of the Group and Company. A description of the principal risks and uncertainties faced by the Group and the Company is provided on pages 48 to 56.

Principal risks and uncertainties

The Group is exposed to a wide range of risks in addition to those listed, and these are managed through the risk management framework shown on page 47. This framework enables us to monitor for any increase in likelihood or impact and ensure that we have the appropriate mitigations in place. The details of our principal risks and uncertainties and the key mitigating activities can be found on pages 48 to 56. We are disclosing those risks and uncertainties that we believe have the greatest impact in achieving our strategic objectives.

Zotefoams’ risk profile will evolve as the business grows at its targeted pace, although we expect these principal risks and uncertainties to remain broadly consistent.

Related party transactions

Directors

The Directors of the Company as at 31 December 2023 and their immediate relatives control approximately 1.3% (2022: 1.3%) of the voting shares of the Company. Details of Directors’ pay and remuneration are given in the Directors’ Remuneration report on pages 90 to 103. Executive Directors are considered to be the only key management personnel. Details of compensation paid to key management personnel are included in note 5.

Subsidiaries and joint venture

Details of the joint venture and subsidiaries of the Company are set out in notes 9 and 13. These companies are considered to be related parties.

The following material transactions were carried out with related parties:

	2023 £’000	2022 £’000
Sale of goods: subsidiaries of the Company	4,434	3,875
Sale of services: subsidiaries of the Company	2,598	2,537
Loans given (net of repayments): subsidiaries of the Company	(708)	(2,419)
Interest income: subsidiaries of the Company	1,302	657
Sale of goods: joint venture of the Company	2,944	3,444
Sale of services: joint venture of the Company	368	232
Total	10,938	8,326

Balances between the Company and its active subsidiaries and joint venture are as follows:

	Receivable from/ (payable to)			Investment in
	2023 £’000	2022 £’000		2023 £’000	2022 £’000
Zotefoams Inc.	12,669	13,163		–	–
Azote Asia Limited	1,000	1,304		–	–
MuCell Extrusion LLC	7,904	6,511		–	–
Zotefoams International Limited	15,487	16,370		30,822	30,822
Zotefoams T-FIT Material Technology (Kunshan) Limited	2,014	3,438		–	–
Zotefoams Poland Sp. z.o.o.	1,190	291		–	–
Zotefoams France SAS	(73)	(59)		–	–
T-FIT Insulation Solutions India Private Limited	–	75		–	–