Weaker sterling gave a rosy glow to Zotefoams ' (ZTF) first-half figures. Revenues hit a record, aided by the tumbling pound, and a £0.5m foreign-exchange gain allowed Zotefoams to report a 5 per cent increase in adjusted operating profit. But that masked challenging trading conditions.
The polyolefin foams business, which accounts for 84 per cent of total revenue, suffered a drop of confidence in its UK market in June and destocking by customers in continental Europe and Japan. A further blow came from a jump in raw material costs as its main polymer supplier hit trouble. So the division's operating profit dropped 7 per cent to £3.8m.
Profits also reversed in the high-performance products division with operating profit at £0.3m, less than half the comparative period's figure. Zotefoams blamed timing issues. Fixed costs rose to support future sales, but customer orders tend to come later in the year.
Chief executive David Stirling says the second half is showing signs of improvement, with August "much more robust" and September "looking decent".
Investec expects adjusted pre-tax profit of £7m, giving EPS of 12.5p for the full year (from £6.4m and 11.6p in 2015), rising to £8.6m and 15.2p in 2017.
| ZOTEFOAMS (ZTF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 265p | MARKET VALUE: | £118m | |
| TOUCH: | 255-270p | 12-MONTH HIGH: | 372p | LOW: 255p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 115p* | NET DEBT: | 14% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 26.5 | 3.0 | 5.5 | 1.80 |
| 2016 | 27.1 | 2.8 | 5.2 | 1.85 |
| % change | +2 | -8 | -6 | +3 |
Ex-div: 15 Sep Payment: 13 Oct *Includes intangible assets of £7.2m, or 16p a share | ||||
