- Govt PPE contracts provide a second half boost
- Improved cash generation and a return to the full-year dividend
Zotefoams (ZTF) appears to have shrugged off the wider supply-chain disruptions through 2020, delivering a slight uptick in sales, a flat operating profit prior to one-off items, and a statutory 10 per cent increase in cash-flows.
That would represent a passable performance under normal circumstances, but shareholders in the cellular material (i.e. industrial foams) specialist can take heart from the group’s rapid response to the logistical challenges posed by the pandemic, and the improved showing in the latter half of the year, partly linked to increased sales volumes for its polyolefin foams for use in UK-government personal protective equipment (PPE).
FactSet consensus gives EPS of 14.8p for 2021, rising to 18.1p in the following year.
The group reinstated the final dividend at 4.27p a share (with an ex-div date of 6 May), another sign of growing confidence. Further logistical problems have come about via Brexit-linked changes and global trade imbalances, effectively hiking-up transportation costs, while PPE sales are set to trail-off. Nevertheless, we bring back to hold at 422p.
Last IC view: Sell, 409p, 11 Aug 2020
| ZOTEFOAMS (ZTF) | ||||
| ORD PRICE: | 422p | MARKET VALUE: | £ 205m | |
| TOUCH: | 421-431p | 12-MONTH HIGH: | 530p | LOW: 152p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 28 | |
| NET ASSET VALUE: | 194p | NET DEBT: | 38% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2016 | 57.4 | 7.00 | 12.1 | 5.22 |
| 2017 | 70.2 | 7.60 | 12.4 | 5.38 |
| 2018 | 81.0 | 9.90 | 17.0 | 6.12 |
| 2019 | 80.9 | 9.81 | 17.1 | nil |
| 2020 | 82.7 | 8.30 | 14.9 | 6.30 |
| % change | +2 | -15 | -13 | - |
| Ex-div: | 06 May | |||
| Payment: | 01 Jun |
