Zotefoams PLC (LON:ZTF) suffered a share price slide on Tuesday as the maker of specialist foam and insulation products saw its profit hit by foreign exchange movements and lower sales of its Polyolefin products.
In a trading update for the year ending 31 December, the group said it expected to report an adjusted pre-tax profit of £9.1mln, down from around £10.8mln last year, while revenues are forecast to be “at a similar level” to 2018’s figure of £81mln.
READ: Zotefoams punctured by profit warning
While profitability in its final quarter had been ahead of expectations, Zotefoams blamed the “adverse impact from foreign rate movements” for an £800,000 hit to its profit figure in the period from 3 October to the end of the year.
The group had also seen its Polyolefin sales fall 10% in the year amid challenging market conditions in the second half, offsetting a 60% rise in sales in its MuCell Extrusion (MCE) division and a 20% increase in its High Performance Products(HPP) business.
Looking ahead, chief executive David Stirling said despite the “challenging” year the firm expected a recovery for the Polyolefins business in 2020 as well as further growth for HPP and MCE.
He added that while current market conditions meant the firm’s long-term capacity investments were currently running at “low utilisation rates”, he expected these to improve in the latter part of 2020.
In a note, analysts at the company's house broker Peel Hunt slashed their price target to 540p from 630p to reflect what they said were the "short term headwinds", although they added that they recognised the "long term growth potential" and reiterated their 'buy' rating.
Investors, however, were less than enthused as the shares slipped 2% to 396p in early deals.