Zotefoams' (ZTF) strategic partnership with shoewear giant Nike is just over a year old now, and it’s already bearing fruit. The specialist foam manufacturer’s high-performance products (HPP) arm ran ahead of expectations, with Nike footwear volumes powering sales up by 67 per cent, against a five-year average rate of around 30 per cent.
Zotefoams’ rapid growth calls for more capacity. Chief executive David Stirling wants the company to make its high-performance products in the UK, where the bulk of its expertise lies. Domestic capacity is set to rise accordingly in the second half, while Zotefoams’ US facility will also increase production. A brand new facility is set to open in Poland in 2020, which will help to serve continental Europe.
The company is funding its expansion plans and rising working capital requirements with an equity fundraising and bank refinancing completed in May 2018 – together, these have raised about £40m in funds that are available to the business, according to Mr Stirling. Zotefoams has made its way through about a third of this so far, he added.
Analysts at Investec forecast 2019 adjusted pre-tax profits of £12.6m and EPS of 20.3p, against prior year figures of £11.1m and 18.9p.
| ZOTEFOAMS (ZTF) | ||||
| ORD PRICE: | 606p | MARKET VALUE: | £293m | |
| TOUCH: | 606-616p | 12-MONTH HIGH: | 716p | LOW: 499p |
| DIVIDEND YIELD: | 1% | PE RATIO: | 36 | |
| NET ASSET VALUE: | 176p | NET DEBT: | 15% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2014* | 48.9 | 4.0 | 7.4 | 4.95 |
| 2015* | 53.9 | 6.0 | 10.1 | 5.10 |
| 2016* | 57.4 | 7.0 | 12.1 | 5.22 |
| 2017* | 70.2 | 7.6 | 12.4 | 5.38 |
| 2018 | 81.0 | 9.9 | 17.0 | 6.12 |
| % change | +15 | +30 | +37 | +14 |
| Ex-div: | 25 Apr | |||
| Payment: | 30 May | |||
| *EPS and DPS adjusted for May 2018 rights issue | ||||
