Zotefoams plc (LSE:ZTF) reported an 18% increase in revenue to £137.1 million for the nine months ended 30 September 2026, supported by acquisitions and strong demand across non-footwear markets, while confirming that full-year adjusted profit before tax remains on track to meet market expectations.
The high-performance foam manufacturer recorded third-quarter revenue growth of 9% to £41.8 million, although organic revenue declined as footwear sales fell more sharply than anticipated.
Third-Quarter Revenue Performance
Group revenue increased to £41.8 million in the third quarter, compared with £38.2 million in the corresponding period of 2025.
The result included a £6.2 million contribution from OKC, acquired in November 2025. Excluding this contribution, organic revenue declined 7% to £35.6 million.
Footwear revenue fell to £9.3 million from £17.6 million a year earlier, reflecting continued weakness in the segment.
However, non-footwear markets delivered organic revenue growth of 28%, supported by demand across transport, industrial and construction applications.
North American revenue increased 33%, while EMEA revenue rose 4%, including the contribution from OKC. Asian revenue remained broadly unchanged.
By market, Transport & Smart Technologies revenue grew 38%, while Construction & Other Industrial increased 32%.
Nine-Month Revenue Growth and Market Diversification
For the first nine months of 2026, Zotefoams generated revenue of £137.1 million, compared with £115.7 million in the previous year.
OKC contributed £21.0 million during the period, leaving organic revenue of £116.1 million, broadly unchanged year-on-year.
Non-footwear organic revenue increased 28% and accounted for 72% of total group revenue, compared with 53% in the corresponding period of 2025.
Transport & Smart Technologies revenue increased 31% during the nine months, while Construction & Other Industrial grew 35%.
Regional revenue increased 15% in EMEA, 30% in North America and 58% in Asia.
Footwear revenue declined to £37.7 million from £54.6 million, reflecting the ongoing transition of production and lower customer volumes.
Vietnam Manufacturing Facility Progresses Towards Production
Zotefoams reported continued progress at its new footwear manufacturing facility in Vietnam.
Key production equipment, including the first autoclaves, was commissioned in September, with initial manufacturing trials now underway.
The facility remains on budget, with its official opening scheduled for December 2026.
Customer approvals are expected around the end of the year, ahead of commercial production and revenue generation beginning in 2027.
The company also confirmed receipt of a $10 million strategic investment from its Vietnamese manufacturing partner, Seo Heung, bringing total investment in the facility to approximately $32 million.
Meanwhile, the group’s Footwear Innovation Centre in South Korea has opened and is receiving customers.
Verttec Acquisition Expands North American Operations
Zotefoams completed its acquisition of US technical foam manufacturer Verttec LLC on 13 October 2026.
The transaction involved initial consideration of $5.1 million, with up to a further $2.2 million payable over 24 months depending on performance.
Verttec, based in Pennsylvania, manufactures technical crosslinked roll foams, adding capabilities to Zotefoams’ existing North American operations.
The company said commercial integration is underway, enabling customers to source both block and roll foam products from a single US supplier.
Integration of OKC also remains on schedule, with initial cross-selling opportunities already secured.
UK Restructuring Could Deliver £4 Million in Annual Savings
Zotefoams continues to review its UK manufacturing operations as higher-volume footwear production moves to Vietnam.
The proposed restructuring remains subject to collective consultation, which is expected to conclude in November 2026.
Under the proposals, the Croydon facility would increasingly focus on materials innovation, higher-value applications and the company’s Global Innovation Hub.
The restructuring would also involve greater utilisation of Polish manufacturing capacity and further investment in automation.
Subject to consultation, Zotefoams expects the changes to generate approximately £4 million in annualised savings from 2027, with a payback period of less than one year.
One-off restructuring costs are expected during the second half of 2026 and will be reported as adjusting items.
Cash Conversion and Balance Sheet
Zotefoams reported third-quarter cash conversion of 93%, improving its year-to-date cash conversion rate to 49%, compared with 37% at the half-year stage.
The improvement followed a reduction in working capital requirements after inventory and receivables increased during the first half.
Group leverage stood at 1.0 times at 30 September 2026, compared with 0.5 times a year earlier, reflecting acquisitions and continued investment.
Leverage remained within banking covenants and below the group’s upper operating range of 2.0 times.
Management expects working capital requirements to decline further during the final quarter.
FY2026 Profit Guidance and Medium-Term Targets Maintained
Zotefoams reaffirmed its expectation that adjusted profit before tax for the year ending 31 December 2026 will be in line with market forecasts, based on current trading and the order book, provided there is no material disruption to key markets.
The company expects second-half margins to be lower than those recorded in the first half, reflecting seasonal production patterns, maintenance shutdowns and weaker footwear volumes.
Management also reiterated its medium-term financial ambitions for FY2029, targeting revenue above £230 million and operating profit of £40 million.
The group expects continued expansion in non-footwear markets, together with contributions from OKC and Verttec, to support future growth.
More About Zotefoams
Zotefoams plc is a UK-based manufacturer of high-performance cellular materials and foam products serving footwear, transport, construction, industrial and other specialist markets. The company operates manufacturing and development facilities across Europe, North America and Asia, supplying lightweight foam technologies and advanced insulation products to customers worldwide.
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