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Zotefoams PLC on Tuesday recorded increased revenue in 2021 on recovered demand, but noted a drop in profit due to cost pressures.
The Croydon-based company, which manufactures industrial plastics posted a pretax profit of £7.0 million in 2021, down 16% from £8.3 million generated in 2020.
The company blamed this decrease on higher raw material costs and significantly increased freight, energy and operating costs for its newly commissioned facility in Poland.
Gross margin declined 4.3% to £26.6 million from £27.8 million while distribution costs increased 7.4% to £7.3 million from £6.8 million and finance costs rose 26% to £1.1 million from £872,000.
Revenue grew 22% to £100.8 million from £82.7 million the year before.
Zotefoams credited the revenue growth to a rebound in demand for polyolefin foams that took a hit due to the pandemic in 2020. Its Footwear business also grew significantly as expected, it said.
Zotefoams raised its dividend 3% to 4.40 pence from 4.27p, year-on-year. This resulted in a total dividend of 6.50p, up 3.2% from 6.30p the year before.
The company said it is currently experiencing good demand across its business consistent with its expectations. Zotefoams said it is also implementing price increases.
‘Prices for polyolefin foams were increased in January and, in some products and geographies, we have additional increases notified to take effect in the second quarter. The inflationary environment for our input costs remains highly unsettled, with pricing of raw materials, freight and energy in particular expected to be volatile for the remainder of the year, at least, and accentuated by current events in Eastern Europe. Our sales prices and margins are therefore being closely managed,’ Zotefoams stated.
Looking ahead, the company expects modest volume growth in its Polyolefin Foams business in 2022. Demand for its footwear products is expected to remain at similar levels to 2021.
‘Geopolitical risks are currently much higher than normal. Whilst these have limited direct impact on our operations currently, we are mindful of the risk that they may lead to more significant indirect impacts, especially in supply chain, inflation and demand, rendering forward-looking statements particularly uncertain,’ Chief Executive David Sterling said.
‘Overall, the board remains confident about the future prospects for our business,’ Sterling continued.
Shares in Zotefoams remained flat at 300.00 pence each on Monday afternoon in London.
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