Selling foams used in car wing mirrors and for packaging made Zotefoams a large chunk of its money last year. Underlying pre-tax profit grew 16 per cent to £5.5m, driven by widespread demand across its developed markets. And excitement surrounding its high performance products (HPP) is building, too.
Indeed it should. Commercial costs and investment meant the division lost over £707,000 in 2011, but managing director David Stirling believes the high-margin unit could one day make up half the business. Zotefoams already supplies the big aircraft manufacturers with lightweight insulation, ducting systems and trim - essential kit for new fuel efficient planes. Confirmed orders for HPP so far in 2012 already exceed last year’s sales of £2.4m. And Zotefoams is having trouble keeping up with demand at technology licensing operation MuCell.
For now, though, 92 per cent of sales come from polyolefin foams. They rose 10 per cent to £40.5m, driving operating profit up 18 per cent to £6.3m. Strong demand in the UK, France and America offset weakness in Asia following the tsunami and issues with supply of its core raw material low density polyethylene (LDPE). The cost of LDPE has risen sharply, but Zotefoams’ skill at passing on cost increases kept gross margin steady at 29 per cent.
Broker Investec expects adjusted pre-tax profit of £5.8m and EPS of 11.8p this year (from 11.6p in 2011).
ZOTEFOAMS (ZTF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 145p | MARKET VALUE: | £57.8m | |
| TOUCH: | 143-147p | 12-MONTH HIGH: | 159p | LOW: 102p |
| DIVIDEND YIELD: | 3.4% | PE RATIO: | 12 | |
| NET ASSET VALUE | 89p* | NET CASH: | £1.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 31.6 | 3.37 | 8.00 | 4.50 |
| 2008 | 34.8 | 3.93 | 8.30 | 4.50 |
| 2009 | 31.8 | 2.75 | 5.90 | 4.50 |
| 2010 | 39.9 | 5.32 | 11.8 | 4.65 |
| 2011 | 44.2 | 5.47 | 11.8 | 4.90 |
| % change | +11 | +3 | - | +5 |
Ex-div: 25 Apr Payment: 23 May *Includes intangible assets of £5.7m, or 14p per share | ||||
