Years of substantial investment in innovation and marketing are paying off for Zotefoams (ZTF). Against a backdrop of sluggish global economic growth, the maker of foam products used in packaging, car wing mirrors and aeroplanes delivered record revenues and a 14 per cent rise in underlying operating profits.
The group's drive to cater to specific industry trends backed by regulation was credited as a major source of last year's success. In 2015 it was all about 'lightweighting'; a process that involves reducing the weight of aircraft to make them more fuel efficient. Soaring demand for Zotefoams' polymers used in window gaskets, air ducts and seats saw sales of high-performance products climb a quarter to £8m.
Although Zotefoams' development of niche, high-tech materials has no shortage of industrial end-users, significant investment is required to remain competitive. Higher spend on sales, development and supply chain surety is expected to support further opportunities, but also meant that divisional profit fell by a fifth to £0.82m. Big money is also being spent to boost capacity at the core Polyolefin foams business, where the objective is to grow sales at twice the rate of global GDP. In 2015 divisional revenues rose an impressive 8 per cent.
Because of additional costs, broker Investec slashed its adjusted pre-tax profit and EPS forecasts by 6 per cent and 7 per cent, respectively. It now expects £7.3m and 12.8p (from £6.4m and 11.6p in 2015).
| ZOTEFOAMS (ZTF) | ||||
|---|---|---|---|---|
| ORD PRICE: | 282p | MARKET VALUE: | £125m | |
| TOUCH: | 282-283p | 12-MONTH HIGH: | 372p | LOW: 232p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 115p | NET DEBT: | 3% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 44.2 | 5.5 | 11.8 | 4.90 |
| 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 |
| % change | +10 | +50 | +35 | +3 |
Ex-div: 21 Apr Payment: 25 May | ||||
