Zotefoams (ZTF) Trading Update summary

Trading performance

• Year-to-date sales rose 23% to £110.7m, with Q3 sales up 54% to £39.7m, driven by strong growth in Footwear and ZOTEK technical foams.

• Footwear volumes increased 60% year-on-year, benefiting from Olympic year demand, new basketball sales, and inventory rebuilding by Tier 1 suppliers.

• Polyolefin foams saw 1% overall volume growth, with a 6% decline in EMEA offset by 18% growth in the USA.

• Margins remained strong due to effective pricing, improved mix, and cost control, despite higher people costs and geographic expansion.

Strategic initiatives and investments

• Continued investment in ReZorce recyclable barrier technology, with operating costs slightly higher year-on-year.

• Key technical milestones for ReZorce, including endurance and sterility testing, targeted for completion by year-end.

• Seeking a strategic partner for commercial-scale ReZorce production, with the process ongoing since May.

• Recent technical agreement with Shincell enhances capabilities in the footwear market and supports international expansion.

Outlook and guidance

• Good order visibility for most business units for the rest of 2024, except T-FIT, which is Q4-weighted.

• Significant revenue growth expected for 2024, with margins in foams units in line with prior year.

• MEL business unit to post a slightly higher full-year loss due to ReZorce development costs.

• Revenue and adjusted profit before tax expected to be in line with market expectations (£145.5m revenue, £14.9m profit before tax).

• Board remains confident in maintaining positive momentum and meeting full-year expectations.