Zotefoams (ZTF) shares leapt after the materials business predicted record sales for its second half, despite weakness in key automotive, aerospace and marine markets. Zotefoams’ polyolefin foams division bore the brunt of the coronavirus pandemic with a 23 per cent revenue decline. But this segment stands to benefit from high PPE (personal protective equipment) demand, and Zotefoams secured a significant contract with its largest UK client last month.
Zotefoams is ready to call its new Polish manufacturing facility into action in its fourth quarter should markets recover and demand rebound. The company is preparing for a surge and increased its inventories by almost a third, while raw materials for aviation purposes will take time to pass through given the turmoil faced by the industry. Inventories as a percentage of sales increased to 72 per cent from 23 per cent at the end of its financial year, having stood at 45 per cent this time last year.
Broker Peel Hunt raised full-year 2020 adjusted pre-tax profits and EPS forecasts to £8.5m and 14p, respectively, up from £7m and 11.5p.
| ZOTEFOAMS (ZTF) | ||||
| ORD PRICE: | 409p | MARKET VALUE: | £199m | |
| TOUCH: | 400-430p | 12-MONTH HIGH: | 570p | LOW: 152p |
| DIVIDEND YIELD: | nil | PE RATIO: | 31 | |
| NET ASSET VALUE: | 189p | NET DEBT: | 39% | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 42.3 | 4.93 | 8.55 | 2.03 |
| 2020 | 34.6 | 2.70 | 4.48 | 2.03 |
| % change | -18 | -45 | -48 | |
| Ex-div: | 10 Sep | |||
| Payment: | 9 Oct |
