Zotefoams (LSE:ZTF) told investors that full-year adjusted profit before tax is expected to be in line with market expectations of £26.3m, even as footwear revenue fell more sharply than the group had anticipated in the third quarter.
The London-listed specialty foam manufacturer, which makes engineered closed-cell foams for footwear, transport and industrial markets, reported third-quarter revenue of £41.8m, up 9% from £38.2m a year earlier, including a £6.2m contribution from the Overseas Konstellation Company (OKC), acquired in November 2025.
Organic revenue fell 7% to £35.6m, driven by footwear revenue dropping to £9.3m from £17.6m in the comparator quarter.
Non-footwear markets now make up 72% of year-to-date group revenue, up from 53% a year earlier, growing 28% organically in the third quarter with North America up 33%.
Year-to-date revenue reached £137.1m, up 18% from £115.7m, with organic revenue of £116.1m roughly flat as first-half growth of 4% was offset by the third-quarter footwear decline.
Cash conversion improved to 93% in the third quarter, lifting the year-to-date figure to 49% from 37% at the half-year, while leverage rose to 1.0x net debt to EBITDA at 30 September, up from 0.5x a year earlier, reflecting investment and the OKC acquisition; the group said this remains within its banking covenants and below its 2.0x upper operating range.
"Our strategy of building a broader, more balanced business continues to deliver," said chief executive Ronan Cox, adding that "the acquisitions of OKC and now Verttec are extending our capabilities and bringing us closer to customers, accelerating strategic progress."
The group completed the acquisition of Verttec, a Pennsylvania-based maker of technical crosslinked roll foams, on 13 October for initial consideration of $5.1m plus up to $2.2m in performance-linked payments over 24 months, funded from existing cash and debt facilities.
In Vietnam, first-stage production trials are under way at the new footwear manufacturing facility following commissioning of key equipment including the first autoclaves in September, with customer approvals expected around the end of the year and commercial production from 2027; the group has also received a $10m strategic investment from its site partner Seo Heung, taking total investment in the facility to approximately $32m.
Read more about Zotefoams
The Footwear Innovation Centre in South Korea is now open and hosting customers, and a proposed restructuring of UK operations, intended to shift high-volume footwear production to Vietnam while repositioning Croydon around materials innovation and the Global Innovation Hub, remains subject to consultation expected to conclude in November; subject to that outcome, the group expects annualised savings of approximately £4m from 2027 with a payback period of under one year.
Zotefoams reiterated its medium-term ambition of revenue above £230m and operating profit of £40m by the 2029 financial year, and expects to publish its next trading update, covering the year ending 31 December 2026, on 21 January 2027.