Zotefoams has issued a trading update ahead of its AGM today, confirming that it is trading in-line with expectations. The first four months to end April has seen continued year-on-year growth with margins benefiting from prior year price increases, operational efficiencies and a stronger dollar. The general cost environment has eased with LDPE now stable, but still above historic averages, whilst energy prices have also fallen. Further sales growth is expected in the year from HPP products with prospects for Polyolefin Foams challenged by current industrial market conditions. The ReZorce carton development is noted as progressing well with downstream processing able to utilise customers’ existing processing equipment. We maintain our 425p TP based on a SOTP approach that takes into account the effect of the Group’s on-going investment in ReZorce. Leverage is continuing to fall with cash generation and is now at its lowest point since 2018.
