Zotefoams (LON:ZTF), a world leader in cellular materials technology, today provided a trading update following the Company’s financial year end on 31 December 2019.
Trading conditions in the final quarter were largely as anticipated with the result that full year Group revenue will be at a similar level to 2018. For the financial year, business units performed as follows:
· c20% increase in High Performance Products (“HPP”) sales;
· c60% increase in MuCell Extrusion LLC (“MEL”) sales and;
· c10% decline in Polyolefin sales, reflecting challenging market conditions in the second half of the year.
In the final quarter of the year profitability was ahead of management expectations prior to an adverse impact from foreign exchange rate movements. From the date of our last announcement on 3 October until 31 December 2019 sterling appreciation resulted in an adverse foreign exchange impact, for this period alone, on Group profit before tax of £0.8m. Of this, £0.6m related to the non-cash translation impact of intra-group loans. The Group therefore expects to report, subject to audit, adjusted profit before tax and exceptional item* for the year ended 31 December 2019 of approximately £9.1m.
All major capital projects were either completed during the year or are expected to complete in 2020 on time and on budget.
The Company expects to announce preliminary results for the year ended 31 December 2019 on Tuesday 24 March 2020.
Commenting on the update David Stirling, Group CEO of Zotefoams, said:
While market conditions during the year have been challenging for our Polyolefins business, we expect to see a recovery in 2020. In line with our long-term strategy we expect to deliver further growth in our HPP and MEL business units.
Due to the current market conditions, recently commissioned long-term capacity investments are expected to run at low utilisation rates, with depreciation and other costs being under recovered in the short term. These investments are consistent with the opportunity and ambition of Zotefoams and, with the anticipated recovery in the markets for Polyolefin foams and further growth from HPP, we expect improved utilisation of these assets in the latter part of 2020.