Zotefoams (LON:ZTF) Announces Earnings Results

Key Points

• Strong first-half results: Revenue increased 23% to £95.2 million, while adjusted operating profit rose 34% to £16.3 million, lifting the margin to 17.1%. Growth in non-footwear markets, North America and the OKC acquisition offset footwear normalization.
• OKC and North America outperformed: OKC generated nearly £15 million in first-half revenue and was earnings-accretive, while North American revenue grew 29% and its operating margin expanded to 17.6%.
• Near-term transition risks remain: Footwear revenue is expected to decline through 2026 and 2027 as production shifts to Vietnam and 3D preforms. A proposed U.K. restructuring could affect more than 100 roles but may deliver about £4 million in annual savings; net debt and working capital are expected to stay elevated through 2027.

Zotefoams (LON:ZTF - Get Free Report) released its earnings results on Wednesday. The company reported GBX 25.70 earnings per share (EPS) for the quarter, Digital Look Earnings reports. Zotefoams had a net margin of 14.28% and a return on equity of 18.25%.

Here are the key takeaways from Zotefoams' conference call:

• Strong first-half performance: Revenue rose 23% to £95.2 million, while adjusted operating profit increased 34% to £16.3 million and the margin expanded to 17.1%. Growth in non-footwear markets, North America and the OKC acquisition more than offset footwear normalization.
• OKC is ahead of plan and earnings-accretive, contributing nearly £15 million of first-half revenue with early cross-selling wins. North America was also a standout, with revenue up 29% and operating margin rising 930 basis points to 17.6%.
• Footwear revenue is expected to decline through the second half of 2026 and into 2027 as production transitions from the U.K. to Vietnam and moves toward 3D preforms. Management describes 2027 as a transition and optimization year, with recovery expected from 2028.
• The Vietnam footwear facility remains on track for first customer product trials in October 2026, while the South Korea innovation center is already hosting tier-one footwear manufacturers. Management continues to target 2029 revenue above £230 million and operating profit above £40 million, excluding any future M&A.
• The company has proposed restructuring its U.K. operations, potentially affecting more than 100 roles, to align Croydon with innovation and non-footwear applications. Although the plan could generate about £4 million in annual savings with sub-one-year payback, working capital and net debt are expected to remain elevated through 2027 during the Vietnam transition.

Zotefoams Stock Down 1.3%

LON:ZTF traded down GBX 6 on Wednesday, hitting GBX 452. The stock had a trading volume of 427,974 shares, compared to its average volume of 190,726. The business's fifty day moving average is GBX 439.29 and its 200 day moving average is GBX 410.17. The company has a market cap of £222.30 million, a PE ratio of 10.07, a P/E/G ratio of 0.66 and a beta of 1.24. The company has a quick ratio of 0.67, a current ratio of 1.02 and a debt-to-equity ratio of 43.83. Zotefoams has a 52 week low of GBX 318.55 and a 52 week high of GBX 479.88.

Analyst Upgrades and Downgrades

Several equities research analysts recently commented on the company. Berenberg Bank restated a "buy" rating and set a GBX 590 target price on shares of Zotefoams in a research report on Thursday, May 28th. Peel Hunt reaffirmed a "buy" rating and set a GBX 550 price objective on shares of Zotefoams in a research report on Wednesday. Three research analysts have rated the stock with a Buy rating, According to data from MarketBeat, the stock has an average rating of "Buy" and an average price target of GBX 605.

About Zotefoams

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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