A year of record performance and strategic momentum as we continued expanding beyond our historical core and strengthening the foundations for long-term growth.
Ronan Cox
Group CEO
Overview
2025 was a year of outstanding performance, building continued momentum for Zotefoams. We delivered record revenues and profits while executing major strategic initiatives against a challenging macroeconomic and geopolitical backdrop. Group revenue increased by 7% to £158.5m (2024: £147.8m), marking a new record for the Group. Adjusted profit before tax increased by 39% to a record £21.2m, reflecting strong operational delivery, disciplined cost management and the benefits of an increasingly differentiated product and market mix. Cash generation also improved materially to nearly £40m, enabling continued investment while maintaining a strong balance sheet and reducing leverage year on year.
This performance was underpinned by robust demand across key end markets, most notably the continued strength of our Consumer & Lifestyle activities, particularly athletic footwear, alongside solid progress in Transport & Smart Technologies. At the same time, we made tangible progress in expanding beyond our historical core markets and product focus, broadening our geographic footprint and deepening customer relationships across a wider range of applications. Despite inflationary pressures, ongoing supply‑chain complexity and geopolitical uncertainty, we exceeded market expectations for the third consecutive year. This consistency of delivery reflects the resilience of our business model and the effectiveness of the strategic changes initiated over the past two years.
Importantly, 2025 was not simply a year of strong financial results; it was a year in which we took meaningful actions to accelerate key components of the strategy. We continued to reshape Zotefoams into a more market‑led, customer‑focused and globally integrated organisation. We invested in innovation and capacity, strengthened our leadership and operating cadence, and took decisive steps to position the Group for sustainable, long‑term growth. The completion of our first acquisition, Overseas Konstellation Company S.A. (“OKC”), the advancement of our manufacturing expansion in Asia, and the continued evolution of our high-performance, more customer-centric culture, all represent concrete progress against the strategic priorities we set out.
The Group’s adjusted operating profit and cash generation improved substantially during the year, funding strategic investments and the acquisition of OKC while preserving financial flexibility. Net leverage at the end of the year was lower than in 2024, despite increased investment activity, reflecting the strength of our operating cash flow and disciplined approach to capital allocation.
Zotefoams continues in 2026 a stronger, more diversified and more resilient business. We are better balanced across markets, regions and customers, supported by a well‑invested global manufacturing footprint and an increasingly market‑driven organisation. With a clear strategy, an engaged and capable leadership team and a strong balance sheet, we are well positioned to continue delivering profitable growth and creating long‑term value for all stakeholders.
Strategic progress
We made strong strategic progress in 2025, delivering against key objectives within our refreshed strategy, Expanding Beyond the Core. Over the past two years, this strategy has focused on repositioning Zotefoams from a predominantly product‑led organisation to a more market‑driven, customer‑centric and globally integrated business. In 2025, that shift moved decisively from intent to delivery.
Fundamentally, Expanding Beyond the Core is about broadening the markets we serve, deepening customer relationships and building a platform capable of delivering sustainable, high‑quality growth. During the year, we advanced this across four interconnected priorities: market orientation, geographic expansion, innovation and technology, and people and culture.
Market orientation
A central pillar of our strategy has been the move to an industry‑led commercial model. At the start of 2025, we reorganised our global commercial organisation around three core market verticals: Consumer & Lifestyle, Transport & Smart Technologies, and Construction & Other Industrial. This represented a fundamental shift away from a product‑centric view of the business and towards a clearer focus on customer needs, application‑driven value propositions and end‑market dynamics.
This new structure has sharpened customer focus, improved accountability and strengthened collaboration across regions. It has also enhanced our ability to identify and prioritise growth opportunities, allocate resources more effectively and develop solutions aligned to specific industry requirements. The benefits of this approach are already evident in improved commercial momentum, a stronger opportunity pipeline and deeper engagement with strategic customers across multiple markets.
Geographic expansion
2025 was also a year of meaningful progress in expanding Zotefoams’ geographic footprint, particularly in regions critical to our long‑term growth. We completed our first acquisition, OKC, extending our presence in Southern and Central Europe and adding complementary capabilities and customer relationships. At the same time, we accelerated our manufacturing expansion in Asia, committing to a major new manufacturing investment in Vietnam to support our largest end market, athletic footwear.
These are targeted strategic actions: we are extending our footprint in ways that improve customer proximity, strengthen supply chain resilience and enhance returns over time. The combination of organic investment and selective M&A activities provides a flexible and disciplined route to geographic diversification.
Innovation and technology
Innovation remains fundamental to our differentiation and long‑term competitiveness. In 2025, we continued to invest in research and development while sharpening our focus on innovation that is closely aligned with our market verticals and customers. We advanced plans to establish a new Global Innovation Centre in the UK, consolidating and upgrading our R&D and testing capabilities, and signed a lease for a Footwear Innovation Centre in South Korea to support closer technical collaboration with key customers and partners in Asia.
At the same time, we took decisive action to reallocate resources away from initiatives that no longer met our strategic or return criteria. As a result of the decision to cease further investment in the ReZorce packaging initiative in 2024, we reallocated resources away from initiatives that no longer meet our strategic and return criteria, and refocused innovation effort on areas with clearer pathways to commercialisation, reflecting a more disciplined and execution-focused approach. This decision has already had a positive impact on profitability, allowing us to redeploy resources towards innovation programmes with clearer pathways to commercial success. As a result, innovation investment in 2025 was more tightly aligned to customer demand, operational efficiency and value creation.
People and culture
Underpinning all of this progress is a continued evolution of our culture and organisation. 2025 was the first full year operating with a refreshed leadership team and a clearer operating rhythm. We introduced a defined set of values – Courage, Impact and Respect – with Health & Safety as our number one priority, to guide decision‑making and behaviour across the Group.
We strengthened leadership capability, clarified accountability and launched initiatives to embed a higher‑performance, more customer‑centric culture. Learning from the highly responsive, customer‑focused ethos of OKC has further reinforced our ambition to improve speed, flexibility and service levels across the Group. These cultural shifts are critical to sustaining strategic momentum and ensuring that execution quality keeps pace with our growth ambitions.
Collectively, the actions taken in 2025 represent a step change in how Zotefoams operates and competes. We are building a more diversified, market‑led and resilient business, with a stronger platform for selective growth. While there is more to do, the progress made during the year gives us confidence that Expanding Beyond the Core is translating into tangible results and positioning the Group well for the next phase of its growth and development.
Expanding Beyond the Core
A defining feature of our progress in 2025 was the acceleration of Zotefoams’ expansion beyond its historical core. This expansion is not about moving away from our strengths; rather, it is about extending them into new markets, geographies and applications where our technology, know‑how and customer relationships can deliver attractive, sustainable returns. During the year, this strategy was advanced through a combination of targeted acquisition, disciplined organic investment and a more focused approach to innovation.
Targeted M&A: establishing a scalable playbook
A major milestone in November 2025 was the successful execution of Zotefoams’ first significant acquisition. In November, we completed the acquisition of OKC, a Spanish foam manufacturer, for total consideration of up to €36m (an upfront cash consideration of €27.6m, plus a deferred element of up to €8.4m based on OKC’s financial performance in 2026). This transaction represents the first tangible step in our strategy to expand selectively through M&A and is expected to be earnings accretive in 2026.
OKC brings complementary capabilities, products and routes to market that align closely with our strategic priorities. It extends our presence in key European markets including Spain, France, Germany and Italy, with minimal overlap with our existing customer base. Importantly, OKC also brings a highly customer‑centric operating model and a strong reputation for responsiveness and service – attributes that we regard as critical differentiators and which we are actively seeking to embed more broadly across the Group.
We are taking a “best of both” approach to integration, preserving the entrepreneurial, customer‑focused culture that has driven OKC’s success, while leveraging Zotefoams’ operational scale, technical depth and global footprint. Early integration work has progressed well, and we expect OKC to make a growing contribution to Group performance over the medium term while also strengthening our capability set.
From a strategic perspective, OKC provides a blueprint for how we intend to approach future M&A: disciplined, selective and focused on strategic fit and value creation.
Organic expansion: building a platform in Asia
Alongside M&A, we continued to invest in organic growth opportunities that are central to our long‑term strategy. Asia is a critical region for Zotefoams over the long term, and 2025 marked a decisive step forward in establishing a manufacturing presence closer to our largest and fastest‑growing end‑markets. To support this expansion, we created a new Managing Director – Asia role during the year, strengthening regional leadership and oversight as we build our platform in the region and execute our investment plans.
During the year, we advanced the development of a new production facility in Vietnam, which will specialise in producing advanced 3D foam preforms for athletic footwear. This investment has the potential to be transformational for the Group; it positions Zotefoams at the heart of a key global manufacturing hub, closer to the customer, expands our technological capability, aligns our capacity with the evolving geographic footprint of our largest customers, and creates a more resilient and cost‑effective supply chain over time.
To manage execution risk and accelerate delivery, we entered into a strategic partnership with Seoheung Co. Ltd. (“Seoheung”), a long‑established specialist in the footwear supply chain with extensive manufacturing experience in Vietnam and across Asia. Under the terms of the partnership, Seoheung will take a 17.5% equity stake in our Vietnam partnership in return for a $10m investment, contributing to the approximate $32m total project cost. This partnership brings valuable local expertise, strengthens customer relationships in the region and reinforces our disciplined approach to capital allocation.
Construction and commissioning of the leased Vietnam site is underway, ahead of planned completion later this year/early 2027. While the facility will initially support our Consumer & Lifestyle business, particularly athletic footwear, its strategic significance is broader. Over time, it will enable the transition of certain volumes currently produced in the UK, freeing up capacity in our European operations to support growth in other markets and applications. This is a clear example of how geographic expansion will support not only growth, but also flexibility, resilience and improved returns across the Group.
Innovation: focus, discipline and customer alignment
Innovation remains central to Zotefoams’ competitive advantage, but our approach in 2025 was characterised by greater focus and discipline. We continued to invest in R&D and innovation infrastructure, while sharpening alignment between innovation activity, customer needs and commercial outcomes.
We progressed plans to establish a new Global Innovation Centre at our UK headquarters, consolidating and upgrading our R&D and testing facilities to support product development and process innovation across the Group. In parallel, we signed a lease for a Footwear Innovation Centre in South Korea, enabling the showcasing of our technology, strengthening technical collaboration with major Asian customers and partners and supporting the ramp‑up of our Asian manufacturing strategy.
The benefits of this more focused approach are becoming evident. Innovation investment is now more tightly aligned with our market verticals, supporting applications where performance, reliability and sustainability are critical. This discipline will remain a hallmark of our innovation strategy going forward.
A platform for sustainable growth
Taken together, our actions in 2025 represent a step change in how Zotefoams is expanding beyond its historical core. Through targeted M&A, disciplined organic investment and a more focused innovation agenda, we are building a broader, more resilient platform for growth. These initiatives are tightly aligned with our strategy, capital discipline and customer priorities, and they provide a strong foundation for continued progress in the years ahead.
Strategic focus – core market verticals
Building on our market-focused approach, our business is organised around three core market verticals: Consumer & Lifestyle, Transport & Smart Technologies, and Construction & Other Industrial.
Consumer & Lifestyle was again our largest vertical in 2025 and the primary driver of Group growth. Demand in athletic footwear remained strong through most of the year, supported by major customer programmes and performance‑led product cycles. While volumes were exceptional, we always expected demand to normalise following this period of growth. Our focus is therefore on positioning the business to win sustainably through the next phase of development, supported by closer customer proximity and a more flexible global footprint.
Beyond footwear, Consumer & Lifestyle includes a range of smaller but attractive niches where advanced foam performance can command premium value. During 2025, we progressed opportunities selectively across consumer and leisure applications, building pipeline depth and focusing on areas with a clear right to win.
Transport & Smart Technologies delivered solid growth, supported by demand in aerospace and other high‑specification applications. Success in this vertical depends on long qualification cycles, deep technical engagement and consistent delivery against exacting standards – areas where Zotefoams’ process capability and technical heritage provide a durable advantage. We continued to invest selectively in capability and customer engagement, prioritising opportunities with clear pathways to sustainable, high‑quality revenue.
Construction & Other Industrial performance was mixed, reflecting softer conditions in parts of the construction supply chain, offset by improved activity in selected industrial applications. This experience reinforces our emphasis on selectivity and margin discipline. Over time, this vertical continues to offer opportunity, supported by long‑term drivers such as energy efficiency and safety requirements, and strengthened by the addition of OKC to our portfolio.
Across all three verticals, the benefit of this structure is increasing clarity – sharper prioritisation, stronger accountability and more effective allocation of talent, innovation effort and capital. While we are still early in this transition, 2025 demonstrated tangible progress in both performance and execution quality.
Cultural transformation
Throughout 2025, we continued to evolve Zotefoams’ culture to support the next phase of the Group’s development, formally embedding our core values - Courage, Impact and Respect - with Health & Safety as our number one priority.
These values provide a shared framework for decision‑making and behaviour across the Group, reinforcing what we expect from ourselves as leaders and colleagues, and how we engage with customers, partners and communities.
Courage is about making clear choices and acting decisively. In 2025, this was reflected in our willingness to challenge legacy ways of working, to reorient the business around market verticals, and to take deliberate strategic decisions – including exiting activities that no longer met our strategic or return criteria. We encouraged teams to focus on what matters most for customers and to take ownership for delivery, supported by clearer accountability and decision rights. This has improved pace, reduced complexity and strengthened customer engagement.
Impact underpins our focus on execution and outcomes. We strengthened cross‑functional collaboration across regions and functions, aligning teams more closely to customers and end markets. This has supported faster problem‑solving, improved prioritisation and more effective deployment of resources. We have seen increasing evidence of a results‑oriented mindset, with teams responding proactively to changes in demand, reallocating capacity where required and maintaining momentum through the year.
Respect shapes how we treat people and how we operate as a global organisation and is reflected in our emphasis on open communication, transparency and collaboration across geographies, helping to break down silos and reinforce a “one Zotefoams” mindset. As part of this, our commitment to Health & Safety remains absolute, and it is the foundation for everything else we do. While any incident is one too many, our safety performance continues to compare favourably with industry benchmarks, and we remain focused on prevention, learning and continuous improvement.
We have also actively sought feedback from employees to ensure that our cultural initiatives are having a meaningful impact. In response, we have continued to invest in leadership capability, including the launch of our Living Brave leadership development programme and the establishment of a Senior Leadership Team to strengthen alignment and cascade strategic priorities more effectively through the organisation.
The integration of OKC during the year has provided further reinforcement of the importance of culture. Their strong customer‑centric ethos and responsiveness have set a high bar and offer valuable lessons as we continue to raise service levels and customer focus across the wider Group.
These cultural changes are critical to sustaining our strategic progress. By fostering an engaged, accountable and customer‑focused organisation, grounded in strong safety discipline and clear values, we are creating the conditions for consistent execution, innovation and long‑term value creation.
Sustainability
Sustainability is integral to Zotefoams’ strategy and to how we operate the business. Our purpose, delivering optimal material solutions for the benefit of society, reflects our belief that advanced foams, when engineered responsibly and used in the right applications, can deliver meaningful environmental and societal benefits over their long service lives. In 2025, we continued to strengthen the foundations of our sustainability approach, embedding it more firmly into operational decision‑making, innovation priorities and governance.
Our focus is practical and disciplined. We are prioritising areas where we can have the greatest impact: reducing the environmental footprint of our operations, improving the sustainability performance of our products, and ensuring strong governance and transparency. Sustainability considerations are increasingly integrated into investment decisions, product development and customer engagement.
Operational environmental performance
During 2025, we made further progress in reducing the environmental intensity of our operations. Energy efficiency initiatives implemented in prior years continued to deliver benefits, supported by improved process control, yield improvements and targeted capital investment. We also increased the proportion of renewable electricity across parts of the Group, including new capacity, and progressed site‑level initiatives such as solar installations and heat‑recovery projects where appropriate. These actions helped to stabilise energy consumption, despite higher production volumes, and supported a continued reduction in specific energy usage.
Waste reduction remains a key focus. Through improved yields, better scrap segregation and increased internal recycling, we reduced waste sent to landfill year on year. While our processes are not water‑intensive, we continue to optimise cooling and handling systems to minimise unnecessary consumption. These improvements reflect our emphasis on operational discipline and continuous improvement.
Product sustainability and innovation
The sustainability impact of Zotefoams’ products is often realised through their use. Lightweight foams contribute to energy efficiency in transport, durability reduces replacement cycles, and high‑performance insulation supports lower energy consumption in buildings and industrial systems. In 2025, we continued to align innovation effort with these outcomes, focusing on applications where material performance and sustainability objectives reinforce each other.
We progressed development work on foams incorporating recycled polymer content and advanced trials in selected applications, while maintaining performance and quality standards. We also continued to explore opportunities to improve circularity, including recycling pathways for production scrap and end‑of‑life material where feasible. These initiatives remain at an early stage, but they are guided by a clear focus on technical viability, customer demand and regulatory compliance.
Governance and oversight
During the year, the Board strengthened its oversight of sustainability matters, reinforcing accountability and ensuring alignment between sustainability priorities, strategy and risk management. We continue to engage constructively with customers, investors and other stakeholders on sustainability topics, recognising the increasing importance of credible data, clear targets and delivery over time.
Sustainability is a long‑term journey, and we recognise that there is more to do. Our approach is grounded in realism and responsibility: focusing on actions that are achievable, measurable and aligned with value creation. By embedding sustainability into how we operate and innovate, we believe Zotefoams can continue to grow responsibly while supporting customers in meeting their own environmental and performance goals.
EMEA performance (Europe, Middle East & Africa)
EMEA delivered another strong year in 2025, building on a very high prior‑year base and demonstrating the resilience and scale of the opportunity for the Group in this region. EMEA remains Zotefoams’ largest region by a significant margin, encompassing manufacturing operations in the UK, Spain and Poland, supported by commercial teams across Europe, India and Hong Kong. The region continues to play a central role in the Group’s value creation, technical capability and customer relationships.
Revenue in EMEA increased by 9.4% to £124.0m (2024: £113.4m), marking a further year of record sales. Growth was driven primarily by continued strength in Consumer & Lifestyle, particularly athletic footwear, alongside solid progress in Transport & Smart Technologies and a more mixed performance in construction‑linked markets. Growth in the region also benefited from an initial contribution from OKC of £2m following completion of the acquisition late in the year, and work is underway to integrate OKC into a unified European commercial and operating model through 2026.
Footwear remained the dominant growth driver in EMEA during 2025. We supported major customer programmes and inventory build activity through significant shipments, and the region benefited from the ongoing geographic shift in global footwear manufacturing, which influenced sourcing patterns and demand for European production. Volumes reached exceptional levels during the year. While this level of growth will not continue indefinitely, our planning assumptions reflect a managed normalisation as customers adjust inventory positions following an unusually strong period.
Beyond footwear, Transport & Smart Technologies in EMEA continued to show momentum, with aerospace demand providing notable support. Our exposure to high‑specification, technically demanding applications remains an important source of balance within the region. In Construction & Other Industrial, performance reflected more mixed conditions across construction supply chains, with softer distributor demand offset by stronger direct industrial sales and a recovery in insulation activity later in the year. Consistent with our strategy, we prioritised quality of revenue and margin discipline, including being prepared to step away from volume that did not meet our return criteria.
Operationally, EMEA executed well under challenging capacity conditions. Our UK and Poland sites performed strongly in meeting customer requirements through periods of high utilisation. The experience of operating close to capacity during peak footwear demand reinforces the strategic rationale for rebalancing the Group’s manufacturing footprint over time. Importantly, EMEA’s performance in 2025 highlights both the depth of customer demand and the importance of disciplined capacity management to protect service levels, operational stability and long‑term value creation.
From a profitability perspective, EMEA’s margin profile during 2025 reflected deliberate choices. Segment margin reduced from 21.5% to 20.5%, driven by a combination of reinvestment in commercial capability, the costs of organisational transition as we embed our market‑vertical model, wage inflation and foreign exchange effects. These impacts were absorbed alongside strong revenue growth and are consistent with our approach of prioritising long‑term value and resilience over short‑term margin optimisation. We view this as an appropriate baseline from which margins can rebuild over time through continued growth, operational efficiency and the benefits of our increasingly market‑focused commercial model.
Beyond its scale, EMEA remains strategically central to the Group. The region combines deep, long‑standing customer relationships, broad exposure across all three market verticals and a concentration of technical capability that underpins much of the Group’s innovation and application development. While footwear has been a dominant growth driver in recent years, EMEA also provides the industrial and aerospace depth that supports diversification as demand normalises.
EMEA has entered 2026 with a stronger portfolio and an expanded footprint. A fuller contribution from OKC, continued progress in non‑footwear pipelines and the progressive rebalancing of capacity over time are expected to support improved resilience and a broader growth base. EMEA will remain a cornerstone of the Group’s performance as Zotefoams transitions to a more balanced global footprint, with disciplined execution and long‑term value creation firmly at the centre of our approach.
EMEA
Revenue
£124.0m
Change 9.4%
2024 £113.4m
North America
Revenue
£30.1m
Change 7.1%
2024 £28.1m
North America performance
Our North America region delivered a resilient performance in 2025, overcoming a more challenging start to the year in Construction & Other Industrial to achieve solid growth for the full year. Regional revenue increased by 7.1% to £30.1m (2024: £28.1m).
Performance was driven principally by continued momentum in Transport & Smart Technologies, which remains the largest market vertical in North America and includes high‑value technical applications such as aerospace and speciality packaging. In the first half, this vertical delivered strong growth, supported by continued success in targeted key accounts and new customer project wins, and that momentum remained a positive feature through the year.
By contrast, Construction & Other Industrial in North America was more mixed, reflecting operational challenges at a key customer that constrained demand early in the year. As set out in our interim reporting, this impacted the performance of our converting operation in Tulsa (Zotefoams Midwest), where volumes declined in the period despite good underlying market conditions. A recovery plan was implemented to improve utilisation and reduce reliance on any single customer over time, including building a broader pipeline aligned with our strategy of moving further along the value chain.
Operationally, we continued to strengthen the region’s platform for growth. The commissioning of our second low‑pressure vessel in North America increased capacity and supports our ability to pursue additional opportunities in polyolefin foams and other technical applications, improving responsiveness to customers and creating headroom for growth.
From a financial perspective, North America’s profitability improved materially, reflecting the benefit of stronger mix in Transport & Smart Technologies and improved operational discipline. The region delivered a clear improvement in performance, with segment profit improving to £3.5m and margin increasing to 11.6% (2024: 6.4%), supported by improved mix, cost control and lower raw material pricing. As we progress through 2026, our focus remains on sustaining this improvement through continued mix enrichment, disciplined cost management and execution of the recovery actions in Construction & Other Industrial.
Looking ahead, North America remains strategically important as a region where we see attractive structural drivers across our target verticals, and where our investments in capacity and commercial focus can translate into stronger growth and improved returns over time. We will continue to prioritise high‑quality opportunities in technical end markets, strengthen customer engagement, and build a more resilient regional mix as we execute our strategy.
Asia performance
Asia currently remains a relatively small contributor to Group revenue, but is strategically critical to Zotefoams’ long‑term growth. In 2025, performance reflected softer near‑term trading conditions and our prioritisation of capacity for other regions, alongside deliberate investment to build a larger platform for the future.
Revenue was driven primarily by Construction & Other Industrial activity through T‑FIT® insulation operations in China and India. The competitive environment in China was more challenging during the year, which led us to be more selective in pursuing opportunities to protect margins. As a result, regional profitability declined to break even, reflecting both lower volumes and early‑stage investment costs associated with Vietnam and South Korea.
Importantly, Asia is in a transition phase. During 2025, we made substantial progress on the development of our new footwear manufacturing facility in Vietnam, supported by our partnership with Seoheung, and on establishing a Footwear Innovation Centre in South Korea. Together, these investments create an integrated innovation‑to‑production platform aligned with customers’ future supply chains.
Initial production in Vietnam is expected from late 2026 into 2027, at which point Asia’s contribution to Group revenues will increase materially. In the near term, our focus remains on disciplined execution and delivery of these programmes within approved investment parameters.
Capacity and investment
During 2025, we continued to invest selectively in capacity, capability and operational resilience to support the delivery of our strategy and to position the Group for sustainable growth. These investments are the result of deliberate, long‑term planning rather than reactive responses to short‑term demand, and they are guided by clear criteria: strategic alignment, disciplined capital allocation and attractive returns.
Over the past several years, Zotefoams has undertaken a significant programme of investment across its global manufacturing footprint. 2025 marked the culmination of several of these projects, alongside continued progress on our next major phase of expansion.
A key milestone during the year was the commissioning of our second low‑pressure expansion autoclave in Kentucky, USA. This investment effectively doubled low‑pressure capacity in North America and was fully operational by the end of the fourth quarter of 2025. The project was delivered on schedule and within budget, immediately enhancing our ability to serve growing demand in Transport & Smart Technologies and improving responsiveness to customers across the region. By increasing throughput and reducing lead times, this additional capacity provides meaningful headroom for growth and strengthens the resilience of our North American operations.
In parallel with adding physical capacity, we continued to focus on optimising and debottlenecking existing assets across the Group. Through targeted efficiency initiatives, improved scheduling, yield improvements and modest equipment upgrades, we were able to increase effective output without significant incremental capital expenditure. For example, in the UK and Poland we achieved productivity gains through improved uptime and process optimisation, effectively creating “virtual capacity” that supported record volumes during the year. These actions demonstrate the importance of operational discipline alongside capital investment.
The most strategically significant investment underway is the development of our new footwear manufacturing facility in Vietnam, which represents a transformational expansion of our footprint. This project will establish Zotefoams’ first major manufacturing base in Asia and is central to our long‑term strategy, particularly in Consumer & Lifestyle. During 2025, we made substantial progress, including site selection, permitting, detailed design and the ordering of long‑lead equipment. The project is being executed through a partnership with Seoheung, which brings deep local expertise and de‑risks both execution and ramp‑up.
The Vietnam facility is designed to support advanced foam preform manufacturing for athletic footwear and will enable a progressive transition of certain volumes currently supplied from Europe. Importantly, this is not simply a capacity addition; it is a rebalancing of the Group’s manufacturing network. Over time, as Asian production comes onstream, capacity in the UK will be freed up to support growth in other markets and applications, improving overall network flexibility, service levels and returns.
From a capital allocation perspective, we maintained a disciplined approach throughout the year. Capital expenditure was focused on a small number of high‑priority projects aligned to strategy, including North America capacity, the Vietnam programme and investment in innovation capability. These investments were funded comfortably through operating cash flow, supported by improved cash generation and tight working‑capital management. Despite completing our first acquisition and advancing major organic investment, the Group exited the year with a strong balance sheet and lower leverage well within covenant limits.
In early 2026, we further strengthened our financial flexibility by refinancing and upsizing our revolving credit facility (to £90m with a £30m accordion), providing additional headroom to support ongoing investment and selective M&A activity. This ensures that Zotefoams has both the capacity and the financial resilience to execute its strategy through the next phase of growth.
With major investments completed or underway in the UK, Spain, Poland, North America and Vietnam, Zotefoams now has a well‑invested and geographically diversified manufacturing platform. As we look ahead, the emphasis will increasingly shift from large‑scale capital projects to ramping up utilisation, improving returns and extracting value from the assets we have built. We remain confident that our capital investments will deliver attractive long‑term returns and support sustainable growth, underpinned by disciplined execution and a strong balance sheet.
Measuring strategic progress
To ensure that our strategy translates into sustained value creation, we track a small number of clear, outcome‑focused metrics that reflect the quality of growth, capital discipline and execution. These measures provide a consistent framework for assessing progress over time and for holding ourselves accountable as we expand beyond our historical core. In 2025, we made progress across all five dimensions.
1. Product and mix quality
A central objective of our strategy is to grow through higher‑value applications rather than volume alone. In 2025, we delivered a further improvement in product and mix quality, with adjusted average selling prices increasing by 2.0% year on year, following a 2.8% improvement in 2024. This reflects continued progress in shifting the portfolio towards more technically demanding, higher‑value applications across Consumer & Lifestyle and Transport & Smart Technologies, alongside disciplined pricing where justified. The result has been improved margin quality and greater resilience through market cycles.
2. Asset utilisation and operational efficiency
We continue to focus on extracting more value from our asset base through operational discipline, rather than relying solely on incremental capital investment. In 2025, overall asset utilisation improved by approximately 4%, building on the progress achieved in 2024. Through debottlenecking, yield improvement and more effective scheduling, we increased effective capacity across the network without significant additional capital expenditure. These gains supported record production volumes and helped manage periods of high demand, particularly in EMEA.
3. Margin development
Profitability improved materially in 2025, reflecting both mix enrichment and operational execution. Adjusted operating margin increased by approximately 220 basis points to 14.4%, up from 12.2% in 2024. This improvement was supported by a richer sales mix, manufacturing efficiency gains and the elimination of losses associated with activities exited in prior periods. While margins vary by region and market, the overall trend demonstrates the effectiveness of our strategy in improving the quality of earnings. Our medium‑term ambition remains to exceed 18% operating margin on a sustainable basis.
4. Capital efficiency and cash discipline
Improving returns on capital is a core strategic priority. In 2025, return on capital employed (ROCE) increased to approximately 13.9%, up from 11.7% in 2024, reflecting higher profitability and better utilisation of invested assets. We also strengthened working‑capital discipline, reducing net working capital as a percentage of sales and improving cash conversion despite higher activity levels. This supported strong operating cash flow, funded strategic investment and maintained balance‑sheet strength. Our medium‑term objective is to achieve ROCE above 20%.
5. Sustainability and long‑term resilience
Sustainability is integral to our definition of long‑term value creation. In 2025, we continued to reduce the environmental intensity of our operations through improved energy efficiency, waste reduction and better process control. We also progressed development of more sustainable product solutions, including materials incorporating recycled content, while maintaining performance standards. These actions support customer requirements, regulatory readiness and the long‑term resilience of the business, and they reinforce our belief that disciplined sustainability and strong financial performance go hand in hand.
People
Our people are central to the delivery of Zotefoams’ strategy. As the business continues to expand beyond its historical core and operate across a more complex global footprint, the capability, engagement and safety of our colleagues remain fundamental to performance and long‑term value creation.
Health & Safety is our number one priority and underpins everything we do. The Board retains ultimate responsibility for health and safety performance and operates with a very low risk appetite in this area. During 2025, we continued to strengthen governance, leadership accountability and frontline engagement to support a more consistent and proactive safety culture across the Group.
We reinforced Board‑level oversight through structured quarterly reporting and further embedded leadership ownership by formalising the Global Health, Safety & Wellbeing Leadership Team, bringing together members of the Group Executive Team, operational leadership, OHSE and HR. This forum provides alignment across regions, supports consistent standards and ensures that learning from incidents and near‑misses is shared openly across the organisation.
Where incidents occurred during the year, they were investigated rigorously and transparently, with corrective actions identified and lessons cascaded across sites. While any incident is one too many, our approach is focused on prevention, learning and continuous improvement rather than compliance alone. To better understand the lived experience of safety across the Group, we also conducted a Group‑wide Safety Culture Survey in 2025. The findings provided valuable insight into leadership visibility, accountability and employee involvement, and are informing our ongoing safety culture improvement programme.
Leadership, capability and engagement
During 2025 we moved to operating with a refreshed leadership structure and a clearer operating cadence. As Zotefoams has become more global, more market‑led and more complex to operate, the demands on leadership have increased. During the year, we focused on strengthening leadership capability at all levels, improving clarity of roles and expectations, and building greater consistency in leadership behaviours across regions.
We strengthened alignment across regions and functions through a more structured senior leadership forum, improving the flow of information, clarity of priorities and accountability for execution. This has supported better cross‑functional collaboration and more effective decision‑making as the Group upscales. Alongside this, we continued to invest in leadership development, reinforcing performance expectations and supporting succession depth in critical roles.
Employee engagement remains a priority. We actively sought feedback from colleagues during the year, including through engagement and safety‑focused surveys, to better understand where we are making progress and where further attention is required. These insights are being used to shape leadership development, communication and ways of working, with a clear emphasis on building an organisation that is accountable, inclusive and focused on delivery.
Building a sustainable organisation
As we invest in new capacity, enter new geographies and integrate acquisitions, we remain focused on building a sustainable organisation with the skills, leadership capability and operating discipline required to execute at pace, without compromising safety or standards. This includes ensuring appropriate resourcing, developing internal capability and maintaining a strong focus on wellbeing alongside performance.
We are clear that sustained success depends on maintaining a culture where people feel safe, respected and empowered to contribute. By continuing to invest in our people, reinforcing clear leadership accountability and keeping Health, Safety & Wellbeing at the centre of everything we do, we are building an organisation that can upscale sustainably and deliver consistently for customers and shareholders alike.
Forward-looking statements
Forward-looking statements have been made by the Directors in good faith, based on information available up to the date of approving this Annual Report.
Current trading and outlook
We have entered 2026 with good momentum. Trading in the early part of the year has been in line with our expectations, supported by continued demand in Transport & Smart Technologies and improving order books across several markets. We are also benefiting from the initial contribution of OKC, where the integration into our European operating model is progressing well.
As anticipated, demand patterns across our markets are becoming more balanced following a period of exceptional growth in Consumer & Lifestyle. In footwear, we expect volumes to moderate from the unusually high levels experienced in 2024 and 2025 as customers normalise inventory positions, this is an expected transition, and our operating plans reflect this shift. Importantly, our exposure across other market verticals continues to strengthen, with healthy pipelines in aerospace, industrial and other technical applications providing a broader base for growth.
Operationally, our focus in 2026 is on execution and delivery. This includes building and maintaining strong service levels, managing capacity carefully across the network, and continuing to improve operational efficiency and margins. We will also progress our major strategic investments, particularly in Asia, ensuring that new capacity and innovation capability are delivered safely, on time and within approved investment parameters.
Looking further ahead, we are increasingly confident that the Group’s medium-term prospects are in line with our stated ambitions. The strategic progress made over the past two years – transitioning to a market-led organisation, expanding our geographic footprint, investing in innovation and building a disciplined M&A capability – has materially strengthened the business. Zotefoams is now more diversified by market, geography and customer, with a clearer right to win in high‑value applications and a more resilient operating platform.
Our medium-term objectives remain unchanged. We continue to target sustained revenue growth, backed by strong margins and ROCE, with cash generation supporting a disciplined capital allocation strategy focused on value creation. We have made good progress down this path in 2025, executing well in the business and identifying opportunities to accelerate strategically. The acquisition of OKC enhances both our growth profile and our strategic optionality, while our investments in Asia and innovation position the Group for the next phase of development.
While we remain mindful of ongoing macroeconomic and geopolitical uncertainties, we are confident that Zotefoams is well positioned to navigate these challenges. We have a clear strategy, a strengthened leadership team, well-invested assets and a strong financial position. The progress delivered in 2025 provides confidence that we have both the capability and the discipline to continue delivering sustainable growth and long-term value for all stakeholders.
R Cox
Group CEO
10 April 2026