Zotefoams (LON:ZTF) reported what management repeatedly described as a “really strong year” in its 2025 preliminary results investor presentation, citing revenue growth, record profitability, and continued progress executing the strategy introduced at last year’s Capital Markets Day.
CEO Ronan Cox said the strategy is unchanged and is now gaining momentum, supported by what he called a “fundamental renewal of the leadership team” over the past two years. CFO Nick Wright, presenting full-year results for the first time since joining last September, said he was “even more convinced by the potential of the business” after seeing performance from inside the company.
Revenue growth and record profitability
Adjusted profit before tax increased 39% to GBP 21.2 million, aided by higher operating profit and lower net finance charges. The company reported adjusting items of GBP 1.1 million, down from GBP 15.2 million in 2024, when it recorded an impairment on the closure of the MuCell Extrusion business. Statutory profit before tax was GBP 20.0 million, compared with the prior year when statutory earnings per share were a loss.
Wright said adjusted earnings per share rose 46% to GBP 0.38, and statutory EPS were GBP 0.464 versus a loss of GBP 0.057 in the prior year. The company proposed a final dividend of GBP 0.0535, bringing the total dividend to GBP 0.0785 per share, up 5% year over year.
On profitability, Wright highlighted gross profit growth of 15% to GBP 52.9 million, with gross margin up 220 basis points to 33.4%. He attributed margin improvement to three drivers:
- More favorable product mix
- Selective price increases to offset cost inflation
- Operational efficiencies, including inventory management, improved utilization, and cost control
SG&A expenses rose 8% to GBP 30.3 million. Wright said distribution costs fell 3.5% to GBP 8.2 million as the company reduced inventory and relied less on external storage, while administrative costs increased due to investment in teams and higher wages in an inflationary environment. He also noted that stopping development spend on ReZorce lowered non-recurring operating costs by GBP 4.9 million, with resources redeployed to core innovation and commercial activities.
Regional performance and capacity constraints
Management described strong performance across the group’s regions, while also pointing to capacity limits in Europe during the year.
In EMEA, Cox said growth was driven primarily by Consumer & Lifestyle—especially footwear—alongside solid progress in Transport & Smart Technologies. He added that demand in Europe exceeded available capacity in 2025. While EMEA delivered another record year, Cox said margins were slightly lower year on year due to deliberate reinvestment in talent and capability, inflation and foreign exchange impacts, and efforts to protect and improve service levels as the customer base expanded.
Wright reported EMEIA operating profit increased 4% to GBP 25.4 million with a margin of 20.5%. Revenue grew 9.4%, and Wright said the lower margin reflected investment in talent and inflation-driven cost increases.
In North America, Cox called the result “a really good example” of the strategy translating into results: revenue grew 7% while profit nearly doubled and margins expanded, driven by a better mix, strong execution in transport and smart technologies (including aerospace), and cost discipline. Wright said North America operating profit almost doubled to GBP 3.5 million and segment margin rose to 11.6%, also helped by lower ReZorce costs. Cox added that commissioning of a second low-pressure vessel in the U.S. provides additional capacity and optionality for future growth, describing the improvement as structural rather than cyclical.
In Asia, Cox stressed the region’s strategic importance, particularly for footwear. Wright said Asia operating profit was GBP 0.2 million and referenced lower construction demand in China, which improved in the second half and has continued into the new year. Cox outlined progress in Korea, where the company has taken possession of a Footwear Innovation Center and is fitting it out, with about 70 footwear-industry experts on the ground. In Vietnam, he said Zotefoams entered a partnership with Seoheung (part of the Jungshin Group), is preparing a facility outside Ho Chi Minh City, and has begun hiring, with Brandon Thomas (formerly of Nike) leading the effort.
OKC acquisition and strategic priorities
Cox said the OKC acquisition “fits squarely within our strategy,” strengthening the European footprint and moving the company further up the value chain, while adding capability, customer access, and optionality. He said integration is progressing well, commercial teams have been integrated, and it is starting to provide a blueprint for future acquisitions. Cox added that management expects more M&A, but emphasized it would remain selective and disciplined.
Wright said the acquisition was funded from existing resources and included an initial cash consideration of EUR 27.6 million, with up to EUR 8.4 million of deferred and contingent payments linked to future performance. He stated the acquisition is expected to be earnings accretive in 2026, its first full year in the group. In Q&A, management noted it paid 7x EBITDA for OKC and “around about” 1x revenue.
During Q&A, management also said around 40% of 2025 revenue came from Nike. Cox said footwear volumes were “exceptional” in 2025 and are expected to normalize in 2026, but he said the business has planned for moderation and expects other growth opportunities to offset the change. He also said OKC would “absolutely more than offset” the moderation, while emphasizing offsetting is not dependent on OKC alone.
Cash flow, leverage, and capital allocation
Wright said cash generated from operations rose 31% to GBP 39.7 million, driven in part by tighter working capital management. Net working capital decreased GBP 7.4 million, reflecting a GBP 4.5 million inventory reduction, a GBP 4.5 million increase in payables from improved payment terms, and a GBP 1.6 million increase in receivables that was slightly below revenue growth.
Capital expenditure increased 4% to GBP 14.2 million, with Wright saying 82% was directed to growth opportunities. He said 46% of CapEx was allocated to ramping up the second low-pressure autoclave in North America and 34% to footwear in Asia (Vietnam and Korea). Return on capital employed rose to 13.9%, up 220 basis points.
Net debt excluding IFRS 16 leases increased to GBP 31.5 million from GBP 24.1 million, which Wright attributed mainly to the OKC acquisition cash outflow. Despite the higher net debt, leverage improved to 0.8x from 0.9x at the end of 2024. The company also refinanced with a GBP 90 million multi-currency revolving credit facility, which includes a GBP 30 million accordion and runs to January 2029.
On capital allocation, Wright said priorities include investing in geographic expansion and innovation (including the UK and Asia), maintaining a progressive dividend policy, taking a disciplined approach to M&A, and returning surplus capital when it offers greater shareholder value.
In Q&A, management said the next acquisition focus is on North America and Europe, and Cox said the company will look for complementary technologies and opportunities for forward integration that expand addressable markets, aligned to its “seven focused industries.”
Management also addressed investor questions on input costs and logistics, saying the business was relatively well hedged on energy in the short term and had no immediate shipping exposure through certain routes. Wright said if elevated input costs persist, Zotefoams would need to reflect those increases in customer pricing, and management said protecting margins over the coming months is a priority.
Looking ahead, Cox said the company entered 2026 with good momentum, with footwear volumes expected to normalize. He said the business is becoming more diversified by market, geography, and application, and that OKC integration and investment in Vietnam to free European capacity support confidence in medium-term targets. Wright said the adjusted tax rate was 12.3% in 2025 due to R&D relief and Patent Box claims, and he expects it to return to a more normal 24% to 25% going forward.
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.
