Zotefoams plc (LON:ZTF), a world leader in high-performance foams, has provided a trading update for the three months to 30 September 2026 and the nine-month period to 30 September 2026, ahead of its full-year results for the year ending 31 December 2026.
The Group has continued to make strategic progress during the period, with strong non-footwear growth offset by lower footwear revenue.
Summary
• Total Q3 Group revenue of £41.8m (Q3 2025: £38.2m), up 9%, including a £6.2m contribution from OKC, which traded in line with plan; organic revenue was £35.6m, down 7%, reflecting lower footwear revenue of £9.3m (Q3 2025: £17.6m).
• Non-footwear markets now represent 72% of YTD Group revenue (YTD 2025: 53%) and continued to grow strongly, up 28% on an organic basis in Q3, with North America delivering another strong quarter, up 33%.
• YTD Group revenue of £137.1m (2025: £115.7m), up 18%, with organic revenue of £116.1m (excluding OKC) in line with the prior year and non-footwear organic revenue up 28%.
• Cash conversion was 93% in Q3, improving YTD to 49% (H1 2026: 37%).
• Leverage was 1.0x at 30 September 2026 (30 September 2025: 0.5x), reflecting continued investment and the acquisition of OKC.
• Strategic delivery continued: first-stage trials under way in Vietnam with customer approvals expected around the end of 2026; the acquisition of Verttec completed in October 2026; the Footwear Innovation Centre in South Korea now open; and UK consultation expected to conclude in November 2026.
Q3 trading
EMEA: revenue increased by 4% in Q3, including the contribution from OKC. On an organic basis, EMEA revenue was lower, reflecting the region’s current exposure to footwear, while non-footwear markets continued to grow, led by Transport & Smart Technologies and Construction & Other Industrial.
North America: revenue increased by 33% in Q3, with good growth across Construction & Other Industrial and Transport & Smart Technologies, supported by the additional low-pressure capacity at Walton.
Asia: revenue was similar to the prior year in Q3, while T-FIT® continued to build its position in China and India.
By market: Transport & Smart Technologies revenue grew strongly, at 38%, reflecting the ongoing structural demand drivers in this segment. Construction & Other Industrial grew 32% in Q3, reflecting further progress in diversifying the Group’s revenue base in what remain mixed end markets. Defence and space opportunities continued to develop, with further specifications secured in 2026.
Footwear: revenue continued to decline, as previously indicated, with the reduction in Q3 greater than the Group had anticipated. Revenue was £9.3m in Q3 (Q3 2025: £17.6m) and £37.7m YTD (YTD 2025: £54.6m). Customer commitment remains strong and the first Vietnam-specific production model has been confirmed with multiple new models under development.
Year to date
YTD Group revenue was £137.1m (2025: £115.7m), an increase of 18%, with OKC contributing £21.0m YTD. Organic revenue of £116.1m was in line with the prior year: growth of 4% in the first half was offset by a 7% reduction in Q3, while non-footwear markets grew 28% organically YTD.
By region, EMEA revenue increased by 15%, including OKC, North America by 30% and Asia by 58%. Transport & Smart Technologies grew 31% and Construction & Other Industrial 35% YTD.
Balance sheet
The Group’s balance sheet remains strong. Leverage was 1.0x at 30 September 2026, comfortably within banking covenants and below the Group’s 2.0x upper operating range, with continued investment in Vietnam, South Korea and the UK Global Innovation Hub. The acquisition of Verttec, for initial consideration of $5.1m and up to a further $2.2m payable over 24 months subject to performance, was completed on 13 October 2026 and was funded from existing cash resources and debt facilities.
Working capital requirements eased during Q3, following the planned build in the first half, which reflected higher inventory and receivables, and cash conversion was 93% in Q3, improving YTD to 49% (H1 2026: 37%). Working capital is expected to reduce in the final quarter and the Group remains focused on cash generation.
Strategic progress
The Group continues to deliver against the commitments set out at the Group’s March 2025 Capital Markets Day under the Expanding Beyond the Core strategy:
• Vietnam: key production equipment, including the first autoclaves, was commissioned in September and first-stage trials are under way at the new footwear manufacturing facility, with the official opening scheduled to take place in December. The facility remains on budget, with customer approvals expected around the end of 2026 and commercial production and revenue from 2027. The Group has also received the $10m strategic investment from Seo Heung, its partner in the Vietnam facility, which takes total investment in the site to c.$32m.
• South Korea: the Footwear Innovation Centre is open and hosting customers.
• Verttec: on 13 October 2026 the Group completed the acquisition of Verttec LLC, a manufacturer of technical crosslinked roll foams in Pennsylvania, USA. Verttec adds a capability the Group did not previously have and is an important step in developing the North American platform. Commercial integration is already under way, enabling customers to source block and roll foam from a single US supplier.
• OKC: integration of OKC, acquired in November 2025, remains in line with plan, with early cross-selling wins across the Group.
• UK capacity: ahead of the transition of footwear to Vietnam, good progress has been made in building a non-footwear pipeline to take up UK capacity, led by Transport & Smart Technologies applications, with encouraging customer engagement and a growing range of opportunities.
• UK: the proposed restructuring of the UK operations remains subject to collective consultation and is expected to conclude in November 2026. The proposals aim to optimise the UK manufacturing footprint and support functions so that the UK business remains aligned with future customer demand. They reflect the planned transfer of high-volume footwear production to Vietnam, closer to our footwear customers, together with increased utilisation of capacity in Poland and continued investment in automation and process improvement. Under the proposals, Croydon would be repositioned around materials innovation, high-value applications and the Global Innovation Hub, which remains on track to begin welcoming customers by the end of 2026.
Subject to the outcome of consultation, the restructuring is expected to deliver annualised savings of c.£4m from 2027, with a payback period of less than one year. One-off costs are expected in the second half of 2026 and will be presented as adjusting items.
Outlook
The Board expects the Group’s continued diversification, together with the contribution from OKC, to support the final quarter. In line with the Group’s established seasonal pattern, second-half margins are expected to be lower than in the first half, reflecting reduced activity in Europe during August, the annual maintenance shutdown at the Group’s facility in the UK, which took place in September this year, and holiday closures in December.
Lower footwear volumes are an additional factor this year. Based on trading to date and the current order book, and subject to there being no material disruption to the Group’s key markets, the Board expects full-year adjusted profit before tax for the year ending 31 December 2026 to be in line with market expectations.*
The Board remains confident in its medium-term ambitions of revenue above £230m and operating profit of £40m by FY2029.
Ronan Cox, Group CEO, said:
“Our strategy of building a broader, more balanced business continues to deliver. Non-footwear markets are growing strongly. The acquisitions of OKC and now Verttec are extending our capabilities and bringing us closer to customers, accelerating strategic progress and providing access to a broader range of opportunities.
“While footwear revenue has declined, the transition is progressing, with first-stage trials under way in Vietnam. The strategic development of the Group is establishing a stronger, more resilient and scalable platform, and we remain confident in our medium-term ambitions.”
Notice of Trading Update
The Group expects to announce its trading update for the year ending 31 December 2026 on 21 January 2027.
* Zotefoams-compiled consensus for the year ending 31 December 2026 is adjusted profit before tax of £26.3m.
