21st Jan 2020 10:11
(Alliance News) - Zotefoams PLC on Tuesday guided for a slight dip in annual profit despite a strong last quarter as its Polyolefin unit faced difficult market conditions.
Croydon-based Zotefoams makes foam products for industries such as sports, construction, marine, automation, medical equipment, and aerospace.
The firm said trading in the last quarter of 2019 was "largely as anticipated", meaning 2019 revenue will be similar to the year before.
Looking segmentally, High Performance Products sales rose by around 20%, MuCell Extrusion sales were approximately 60% higher, but Polyolefin sales fell approximately 10% in a tough second-half market.
Zotefoams said fourth-quarter profit was ahead of management expectations, though the quarter will see a GBP800,000 currency hit. Zotefoams has guided, as a result, for adjusted pretax profit in 2019, before exceptional items, of GBP9.1 million.
The figure a year prior was GBP10.8 million, a record for the company, which signals a 16% decline.
Chief Executive David Stirling 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," Stirling added.
Shares were 1.2% lower on Tuesday morning in London at 398.99 pence each. Shares fell to nearly 300p, from well above 500p, in October after Zotefoams warned of problems in the Polyolefin unit.
By George Collard; [email protected]
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