Foams manufacturer Zotefoams (LON: ZTF) had a strong finish to 2022 and this sparked a profit upgrade for 2022. The high performance products (HPP) business did particularly well.
Fully listed Zotefoams had already published a trading statement in the middle of December. More orders came in after that statement. Group revenues will be 26% ahead at £127.4m. Demand recovered in the aviation market and footwear sales were 26% ahead.
The weak automotive market meant that European sales fell. Sustainable products division MuCell Extrusion increased revenues by 23% to £2.8m, and the development of the ReZorce mono-material barrier packaging business continues. This is 100% recyclable and uses less water and energy. It is still early days and a partner will help to accelerate growth.
Underlying pre-tax profit is forecast to improve from £7.2m to £12.3m – an upgrade of 9%. At the beginning of December, a pre-tax profit of £10.7m was forecast.
Net debt is expected to fall from £33.2m to £25.8m at the end of 2022. Capital spending is expected to increase in 2023, but debt should still reduce. The share price rose 5.5p to 355p. The 2022 multiple is 18 and the forecast yield is 2%. There is no change to 2023 and 2024 forecasts yet. No profit growth is currently forecast for 2023, but this could be upgraded when the full 2022 figures are published on 21 March. Earnings will be held back by a higher tax charge.
