Zotefoams pleased with good progress to date and the short term outlook (LON:ZTF)


Zotefoams plc (LON:ZTF) Chief Executive Officer David Stirling caught up with DirectorsTalk for an exclusive interview to discuss highlights from their interim results, strong markets, underlying profit, progress of  ReZorce and the outlook for the business going forward.

Q1: First off, congratulations on a strong set of results. Could you talk us through the highlights?

A1: So, results highlights, revenue up 23% on the previous first half, that’s a mixture of volume growth and price growth.

In the polyolefin business, it’s mainly price as we recovered the ongoing input cost inflations but with 4% volume growth and in the High Performance Products, it’s a mixture of both but substantially volume growth.

So, overall that’s given us an operating profit growth of 41% and earnings per share growth of 44% in the period.

Q2: Which markets in particular are contributing to the strong set of results?

A2: Well, certainly our High Performance Products with continued very strong footwear business where we have an exclusive deal with Nike and a return from low base of aviation sales in our Polyolefin business.

I think we’ve seen across the board good growth but certainly I pick out North America which in the period GDP grew almost 50% top line, which is very strong so that’s an excellent performance from that team over there.

Q3: Now in the news, you mentioned that you expect full year underlying profit to be ahead of market consensus expectations, why is that?

A3: I think partly because we’ve been performing very well thus far in the year, we are sitting with a fairly good order book in the third quarter and pricing is now caught up with the cost inflation. Cost inflation seems to be muted, at least in our business other than energy, which is still running ahead as everyone knows.

I think we’ve been pretty well positioned and we look at our order book and we think actually the balance of probability is we would be ahead of those market expectations and at least some of the analysts have now updated their numbers to reflect our first half trading.

Q4: Now, you’ve signed a key patent granted in the USA for ReZorce recyclable packaging technology. Can you update us on the progress with ReZorce please?

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A4: ReZorce is an application of foaming technology which allows us to make a variety of different consumer packaging from cartons to pouches, to toothpaste tubes, sachets etc., all of which today are made using multiple different raw materials, making them very difficult to recycle. If you want the full story, look on the Zotefoams website under ReZorce.

The progress that we’ve made in developing that technology, we have now been awarded the first US patent, which is great progress. Also we have progressed to early stage trials of a carton, manufacturing that on industrial machinery, very low volumes at the moment but it’s a very good step on the journey so pleased with that.

Quite a lot to do, but it is a very big and an interesting market and we’re certainly ticking a lot of sustainability boxes with a much lower carbon footprint and much lower energy consumption than incumbent products on a system which is completely recyclable and can use recycled content as well so it’s a circular economy play.

Good progress to date.

Q5: You’ve talked about good momentum leading into the second half. With that mind, what’s the outlook like for Zotefoams?

A5: I think certainly, as I said, the outlook in the second half, we’re sitting with a good order book and customers talking to us, they’re all pretty busy so I think we are looking, as we said, at good growth for the year overall.

The second half last year was a difficult period for us and so, certainly we should see the momentum in the first half continue into the second half of this year. Beyond that, I think we’re well positioned with the investments we’ve made, we’ve been investing in capacity and new technology, including products from recycled materials etc. because that’s what the economy’s looking at now.

So, I think we’re well positioned and I’m pleased with the progress to date and the short term outlook.

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