A burgeoning licensing and equipment sales business was a particular bright spot for plastic products manufacturer Zotefoams (ZTF), which grew its total revenue to a record £27m for the half year. The Croydon-based group's MuCell Extrusion division, which licenses microcellular foam technology, saw sales increase by 39 per cent to more than £1m. While that only represents 4 per cent of group revenues now, management expect this to develop given major clients such as Unilever (ULVR) and Mondi Consumer Packaging Technologies.
Group profits were helped as Zotefoam's main raw material, low density polyethylene, fell due to the drop in oil prices. European demand has since driven prices for the material up but, given that the material is priced in euros, this is partially hedged by Zotefoams' euro-denominated sales. The lower materials cost combined with greater volumes lifted operating profit from its polyolefin foam division up by a fifth to £4m.
Encouragingly, Zotefoams also saw sales for its fire-retardant foams more than double outside of its largest market, the US, with particular success selling to the aviation industry. The group put this down to its investment in key staff in recent years, and is targeting a larger impression in the sports and automotive industries. A Chinese joint venture announced in March should also mean it can start producing foam there in October.
Analysts at Investec expect full-year pre-tax profit of £6.4m, giving EPS of 11.6p, up from £5.6m and 11.1p, respectively, in 2014.
| ZOTEFOAMS (ZTF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 292p | MARKET VALUE: | £128m | |
| TOUCH: | 290-298p | 12-MONTH HIGH: | 365p | LOW: 211p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 111p | NET CASH: | £2.2m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 24.7 | 1.6 | 3.2 | |
| 2015 | 26.5 | 3.0 | 5.5 | 1.80 |
| % change | +8 | +88 | +72 | +3 |
Ex-div: 10 Sep Payment: 8 Oct | ||||
