Zotefoams upbeat after winning PPE foam contract
By Sean Farrell
Date: Tuesday 02 Jun 2020
(Sharecast News) - Zotefoams said second-quarter trading was in line with expectations and that performance would improve in the second half after it won a contract to provide foam for personal protective equipment (PPE).
The foam products maker said demand was weaker in April and May, caused by Covid-19 disruption in several markets. But it said trading was in line with board expectations in early April.
Zotefoams said it had been pursuing new business opportunities and would supply its Plastazote foams for a large contract awarded to its biggest UK customer. Its foams will be used to make equipment under the UK government's PPE initiative for frontline workers. The project will immediately and run for 26 weeks.
The company said conditions were too uncertain for detailed financial guidance but that it expected a stronger performance in the second half of the year, helped by demand for footwear and technical insulation products. Zotefoam shares rose 7.9% to 316p at 11:30 BST.
David Stirling, the company's chief executive, said: "We remain mindful of the continued level of uncertainty and expect market conditions to remain challenging in the short term. However, this incremental foam order, together with the continued robust HPP pipeline and strong cost management delivered to date, further supports the board's confidence in the group's balance sheet strength, its growth strategy and in the long-term prospects of the business."
Zotefoams put dividends on hold in April and embarked on cost cuts after the Covid-19 pandemic added to economic uncertainty that had affected demand for its products.
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