Zotefoams hit by profit downgrades

This was primarily caused by a 9 per cent fall in sales at the core polyolefin foam division, which accounted for £20.3m, or 88 per cent of revenues. Management blamed lower levels of demand in Europe and one-off effects of customer destocking in response to shortened delivery times.

Decent growth in several of Zotefoams' emerging product lines points toward a brighter future, however, including a 15 per cent rise in revenues at the high-performance polymers (HPP) division, which manufactures flame resistant foams for the aviation industry. Even though this is less than the 51 per cent growth rate seen across 2012, Clifford Hurst, Zotefoams' finance director, says growth in the division often fluctuates and it's still growth on top of growth. Positively, sales of Zotefoams' MuCell microcellular foam technology increased 22 per cent year on year, compared with flat sales across 2012.

Broker Investec Securities cut its full-year earnings estimates by 7 per cent post results, in part because of the extra investment needed to establish sales and manufacturing in Asia under a recently signed joint-venture agreement. Analysts expect flat current year pre-tax profits of £5.8m and EPS of 11.6p, rising to £6.5m and 12.7p in 2014 (from £5.8m and 11.6p in 2012).