Away from its domestic market, Zotefoams (ZTF) generates 38 per cent of its revenue in continental Europe, and another 45 per cent in other parts of the world. Little wonder, then, that with the triggering of Article 50 of the Lisbon treaty now imminent, group management remains mindful of "the potential risks and complications which may be caused by Brexit". The specialist foams business already generated a loss on forward hedging contracts as a result of sterling's post-referendum decline, although that was largely offset by a translation gain on US dollar receivables.
The currency effect fed through into a 19 per cent rise in gross profit to £20.5m, reflecting a 370 basis point increase in the margin. Hedges aside, the group was favourably placed to benefit from translation effects, given that most costs - with the notable exception of those for euro-denominated polyolefin foams - are incurred in sterling. Unfortunately, this can mask underlying trading performance. Revenues from the core polyolefin foams segment increased 4 per cent to £44.7m, although sales volumes and constant currency revenues were down 5 per cent on 2015. There was a better outcome at the smaller HPP unit, where sales increased by 7 per cent after translation effects.
N+1 Singer gives adjusted pre-tax profit of £8.7m for the December 2017 year-end (£7.2m in 2016), giving EPS of 15.7p.
| ZOTEFOAMS (ZTF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 298p | MARKET VALUE: | £132m | |
| TOUCH: | 298-303p | 12-MONTH HIGH: | 320p | LOW: 231p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 127p | NET DEBT: | 22% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 47.2 | 5.8 | 11.8 | 5.20 |
| 2013 | 44.6 | 3.9 | 8.0 | 5.30 |
| 2014 | 48.9 | 4.0 | 8.2 | 5.45 |
| 2015 | 53.9 | 6.0 | 11.1 | 5.60 |
| 2016 | 57.4 | 7.0 | 13.3 | 5.75 |
| % change | +7 | +16 | +19 | +3 |
Ex-div: 20 Apr Payment: 25 May | ||||
