Zotefoams LON: ZTF reported higher first-half revenue, profit and margins for 2026, as growth in non-footwear markets, North America and the acquired OKC business offset an expected decline in footwear demand.
Group revenue rose 23% to £95.2 million, including the first full half-year contribution from OKC. Organic revenue increased 4%, or 6% at constant currency, according to Group CEO Ronan Cox. Adjusted operating profit increased 34% to £16.3 million, while adjusted operating margin improved by 130 basis points to 17.1%.
“The first half really shows diversification and disciplined execution working together,” Cox said, describing the results as evidence that the company’s strategy of expanding beyond its traditional markets is gaining traction.
Non-Footwear Growth Offsets Footwear Normalization
Zotefoams said its business mix became more balanced during the period. Transport & Smart Technologies revenue increased 76%, becoming the company’s largest vertical, supported by aerospace, space and automotive demand. Construction & Other Industrial revenue rose 41%, led by North American growth and higher sales in Asia.
Consumer & Lifestyle revenue declined 19%, reflecting the normalization of footwear demand following what management described as an exceptional period of demand through 2025. EMEA footwear revenue totaled £28.5 million, down 23% year over year.
Cox said the long-term opportunity in footwear remains intact, but the business expects revenue from that market to be lower in the second half of 2026 and into 2027 as manufacturing transfers from the U.K. to Vietnam and the company shifts from foam shapes to 3D preforms. Zotefoams expects footwear revenue to recover from 2028.
In EMEA, revenue reached a record level, rising almost 20%. The region’s operating profit increased 22% to £16.8 million, producing a 22.8% operating margin. OKC contributed just under £15 million of revenue in its first full half-year within the group and was ahead of plan and earnings accretive, management said.
North America Delivers Margin Expansion
North America was a standout contributor, with revenue rising 29% and operating profit nearly tripling to £3.3 million. Segment operating margin increased by 930 basis points to 17.6%.
The company attributed the improvement to broad demand across Transport & Smart Technologies and Construction & Other Industrial, as well as key-account wins, higher factory output and improved operational performance. A second low-pressure vessel is now fully operational, providing additional capacity and allowing the company to process higher volumes at marginal cost.
Cox said Zotefoams believes it can potentially double U.S. revenue to close to $100 million without significant additional investment, although capacity depends on product mix.
Asia revenue more than doubled to £3.9 million, primarily due to Construction & Other Industrial demand in China and India. Operating profit in the region improved to £0.5 million from break-even in the prior year, despite start-up costs related to the company’s Vietnam and South Korea investments.
Vietnam and South Korea Investments Advance
Zotefoams is building a footwear manufacturing facility in Vietnam intended to provide in-region production, shorter lead times and a more sustainability-focused operating model. The company said it has received required permits and construction licenses, while machinery and autoclaves have arrived on site.
Management expects the facility’s autoclaves to be commissioned in September, with first-stage customer product trials beginning in October. Cox said initial production is expected around June 2027, followed by optimization throughout that year.
The company has also opened its South Korea Footwear Innovation Centre, which is already hosting customers and tier-one footwear manufacturers. The facility is intended to support material development and accelerate footwear design cycles. Further equipment, including high-pressure autoclaves, is expected in 2027.
Zotefoams said its partnership with Seoheung has supported the Vietnam expansion through local footwear-market knowledge and injection-molding expertise.
Cash Use, Debt and U.K. Optimization Proposals
Adjusted profit before tax rose 34% to £15.3 million, while adjusted earnings per share increased 29% to 25.7 pence. The company proposed an interim dividend of 2.63 pence per share, up 5%.
Cash generated from operations declined to £8.2 million from £15.8 million a year earlier as the company increased investment in working capital and capital expenditures. Net working capital rose £14 million, with about half related to higher inventory in the U.K. and U.S. to protect customer supply and manage the footwear transition to Vietnam.
Capital expenditure was £7.2 million, mainly for Asia and the Global Innovation Hub in the U.K. Net debt increased to £39.1 million from £31.5 million at year-end, reflecting strategic investment and deferred consideration for OKC. However, leverage remained below one times, below the company’s target of two times.
Following a January refinancing, Zotefoams has a £90 million multicurrency revolving credit facility and £50 million of liquidity headroom.
The company also announced proposals to optimize its U.K. business, including a collective consultation process that could affect more than 100 roles. The Croydon site would focus on materials innovation and non-footwear applications, while the company continues to transfer footwear production to Vietnam and increase use of its Poland facility.
Group CFO Nick Wright said no final decisions have been made. Subject to consultation, the changes are expected to generate annualized savings of about £4 million, with a payback period of less than one year. Related redundancy and plant-impairment costs would be treated as adjusting items and would not alter the company’s adjusted expectations for the full year.
Zotefoams maintained its full-year expectations and reiterated its medium-term ambition to exceed £230 million in revenue and £40 million in operating profit by the 2029 financial year, excluding potential acquisitions.
About Zotefoams (LON:ZTF)
Zotefoams plc, together with its subsidiaries, manufactures, distributes, and sells polyolefin block foams in the United Kingdom, rest of Europe, North America, and internationally. The company operates through Polyolefin Foams, High-Performance Products, and MuCell Extrusion LLC segments. It offers AZOTE, a polyolefin foam under the Plastazote, Evazote, and Supazote, AZOTE Adapt brands; and various high-performance foams manufactured from fluoropolymers, engineering polymers, and specialty elastomers under the ZOTEK brand; and Ecozote foam for plastic products that offers circularity and reduce reliance on fossil fuel-derived raw materials.
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