Zotefoams’ (ZTF) exclusive partnership with Nike is continuing to pay off. The materials technology group saw 47 per cent growth in its footwear business, making it the largest segment in the high-performance products division. The footwear market works in two-year product cycles and the current one is reaching an end, so management expects a relatively flat performance from the business in the rest of the year, before growth kicks off again next year. Elsewhere in the division, fluoropolymer foams for aviation and insulation products were subject to increased demand, leading to sales growth of 40 per cent in the division overall. Business in the division is higher margin, and led the group gross margin to expand 140 basis points to 35.5 per cent.
Such growth requires investment, and the group saw an increase in net debt during the period due to increased capital expenditure demands. The group is also investing in increased capacity in the UK, Poland and the US – where the additional capacity will add an expected 20 per cent to group capacity when completed in October this year. The UK and Poland expansions are expected to become operational in 2019 and 2020, respectively. Broker Investec estimates the three projects will increase the group’s capacity by around 60 per cent over 2017 base volumes.
Investec is forecasting adjusted pre-tax profit of £12.6m for the full year, giving EPS of 20.3p, up from £11.1m and 18.9p in 2018.
| ZOTEFOAMS (ZTF) | ||||
| ORD PRICE: | 562p | MARKET VALUE: | £271m | |
| TOUCH: | 560-576p | 12-MONTH HIGH: | 716p | LOW: 499p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 32 | |
| NET ASSET VALUE: | 182p | NET DEBT: | 27% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 37.9 | 4.60 | 8.07 | 1.97 |
| 2019 | 42.3 | 4.93 | 8.55 | 2.03 |
| % change | +12 | +7 | +6 | +3 |
| Ex-div: | 12 Sep | |||
| Payment: | 10 Oct | |||
