Zotefoams (LSE: ZTF) stock tumbles 15% after Q3 2025 update, despite full-year outlook and Asia expansion push

Zotefoams plc (LSE: ZTF), a global manufacturer of advanced cellular materials, saw its share price plunge by more than 15 percent on November 4, 2025, despite issuing a third-quarter trading update that reaffirmed its full-year revenue and profit outlook. The stock dropped by 68 GBX to close at 382 GBX, marking its steepest single-day decline of the year, even as the company maintained confidence in its strategic execution, operational progress, and Asia-focused expansion efforts.

The market reaction followed the release of the company’s third-quarter trading update, which showed a revenue figure of £38.2 million for the three months ending September 30, 2025. This compared to £39.7 million in the same period last year. While the performance was in line with internal expectations and flat on a constant currency basis, it came against a strong year-ago comparator and failed to offset investor concerns over regional imbalances, especially the 16 percent year-on-year revenue drop in the North American market.

Despite significant progress in manufacturing footprint expansion, including the launch of a joint venture in Vietnam and the signing of a new footwear innovation hub lease in South Korea, Zotefoams plc faced a selloff that dragged its share price to a multi-month low. The stock had recently tested the 470 GBX level in late October, before reversing sharply on the day of the trading update.

What factors triggered the double-digit fall in Zotefoams plc shares following the Q3 2025 update?

Zotefoams plc’s third-quarter update reaffirmed steady financial performance and strategic progress, but several market signals point to why investors reacted negatively. First, the reported revenue of £38.2 million represented a marginal decline from the £39.7 million achieved in Q3 2024. While this was expected internally and came in line with guidance, the deceleration in actual terms, especially in the context of a high base from the prior year, likely fueled concerns about short-term growth momentum.

Second, the North American revenue contraction was more severe than anticipated. Revenue in that region declined 16 percent in Q3, following a robust first half. The fall was attributed to phasing of orders in Transport and Smart Technologies, coupled with subdued demand in the Construction and Other Industrial vertical. Given that North America is typically a high-margin region for Zotefoams plc, this reversal may have influenced institutional sentiment and earnings models, especially for investors focused on margin resilience.

Third, despite highlighting progress in Asia and other strategic verticals, the company did not revise its full-year outlook upward. Zotefoams plc maintained its forecast for mid-single-digit revenue growth for the year ending December 31, 2025. While reaffirming guidance offers stability, some investors may have viewed the absence of a raised outlook as a signal that upside catalysts are already priced into the stock, especially after a strong rally earlier in the year.

How did Zotefoams plc perform across EMEA, North America, and Asia during the third quarter?

Zotefoams plc’s regional performance was a mix of resilience in Europe, the Middle East, and Africa, softness in North America, and emerging traction in Asia. In the EMEA region, third-quarter revenue declined by just 1 percent. The anticipated seasonal moderation in the Consumer and Lifestyle vertical was largely offset by sustained demand in Transport and Smart Technologies, as well as continued growth in the Construction and Other Industrial segments, where insulation demand remained firm, particularly in the United Kingdom.

In contrast, the North American region reported a 16 percent decline in third-quarter revenue. This drop came after a strong first half and was primarily linked to order phasing in the Transport and Smart Technologies vertical and lower activity in Construction and Other Industrial. Zotefoams plc attributed part of the softness to demand headwinds and adjustments in distribution channel partnerships, which may have created a temporary drag.

Asia, though currently a smaller revenue contributor, showed promising trends. Quarterly revenue in the region reached £1.1 million, up from previous levels, and remains strategically important as the company lays the groundwork for its Vietnam manufacturing presence. The Consumer and Lifestyle vertical is expected to benefit significantly from these efforts, particularly as Zotefoams plc aligns closer to global footwear supply chains.

Year-to-date, Zotefoams plc reported group revenue of £115.7 million, up 5 percent compared to the same period in 2024. On a constant currency basis, growth stood at 7 percent. The EMEA region saw a 7 percent revenue increase year-to-date, with strong demand from major customers like Nike plc in the first half. North American revenue held flat compared to 2024 overall, with a 16 percent growth in Transport and Smart Technologies offset by a 12 percent decline in Construction and Other Industrial. In Asia, year-to-date performance was supported by the T-FIT insulation business, which grew 5 percent. However, last year’s revenue included one-time sales in Transport and Smart Technologies that were not repeated in 2025.

What strategic milestones did Zotefoams plc achieve in Q3 2025 to strengthen its long-term outlook?

Zotefoams plc emphasized that the third quarter was a period of significant strategic execution. The company finalized a joint venture with Seoheung Co. Ltd., a South Korean footwear supply chain expert, to support its planned manufacturing facility in Vietnam. Seoheung is investing $10 million for a 17.5 percent equity stake, which reduces Zotefoams plc’s capital exposure and mitigates both financial and operational risk.

In parallel, Zotefoams plc appointed Brandon Thomas as Managing Director for Asia. Thomas brings substantial industry experience, having previously led Nike plc’s Air Manufacturing Innovation facility in Vietnam. His appointment is expected to accelerate the company’s regional scaling and deepen relationships with global athletic brands.

In South Korea, the company secured a lease for a new footwear innovation hub. This facility is intended to enhance Zotefoams plc’s product development capabilities and reinforce its position within the global sportswear ecosystem.

Domestically, the company committed to establishing a global innovation centre at its Croydon site in the United Kingdom. The centre will consolidate R&D resources across Consumer and Lifestyle, Transport and Smart Technologies, and Construction and Other Industrial verticals. This investment is aimed at fast-tracking product innovation and customer engagement.

In North America, Zotefoams plc completed the commissioning of a second low-pressure vessel. The additional production capacity will support the Group’s medium-term growth objectives in aerospace, medical, and specialty packaging.

The company also provided an update on its previously paused ReZorce circular packaging business. While Zotefoams plc formally exited active investment in ReZorce in December 2024, it has now transferred certain intellectual property rights to a new company, ReZorce Limited. The entity was formed by a consortium that includes the former business lead for the platform. Zotefoams plc will not provide further funding, but retains the right to a cost-free minority equity stake if the business reaches commercialisation.

What is the outlook for Zotefoams plc for the rest of FY25, and how are institutions reacting to the results?

Zotefoams plc reiterated its full-year 2025 guidance, projecting mid-single-digit growth in group revenue. Based on current customer orders, sales forecasts, and foreign exchange assumptions, the company expects to meet market expectations for both revenue and adjusted profit before tax. Zotefoams plc has not issued any changes to its previously compiled consensus, which forecasts revenue at £154.4 million and adjusted profit before tax at £20.5 million for the financial year ending December 31, 2025.

While management remains confident in order book visibility through the final quarter, investor sentiment was more circumspect following the Q3 update. The 15 percent drop in the share price on the day of the announcement suggests that institutional investors may be reassessing growth expectations, particularly in light of recent margin compression in North America.

Nonetheless, analysts appear to acknowledge that Zotefoams plc is still executing well on its strategy. The capital-light structure of the Vietnam expansion, combined with new product innovation capabilities in South Korea and Croydon, positions the Group for long-term competitiveness. Whether or not the stock stabilizes will likely depend on Q4 delivery and early visibility into 2026 pipeline orders.

What are the key takeaways from Zotefoams plc’s Q3 2025 results, share price drop, and regional strategy update?

• Zotefoams plc (LSE: ZTF) reported Q3 2025 revenue of £38.2 million, down from £39.7 million in Q3 2024 but in line with expectations on a constant currency basis.
• The share price fell by 15.11 percent to 382 GBX on November 4, 2025, marking the steepest single-day drop of the year despite reaffirmed full-year guidance.
• North American revenue declined 16 percent in the third quarter due to order phasing and weaker demand in construction and industrial sectors.
• EMEA region showed stability, with only a 1 percent revenue decline in Q3 and year-to-date growth of 7 percent across verticals including Consumer & Lifestyle and insulation.
• Asia contributed £1.1 million in Q3 sales and continues to grow in strategic importance, supported by the new Vietnam manufacturing joint venture with Seoheung Co. Ltd.
• Zotefoams plc confirmed its full-year 2025 outlook, targeting mid-single-digit revenue growth and adjusted profit before tax of £20.5 million on projected revenue of £154.4 million.
• Strategic milestones in Q3 included leasing a new footwear innovation hub in South Korea, appointing Nike veteran Brandon Thomas to lead Asian operations, and committing to a global R&D center in Croydon.
• The company formally exited its ReZorce circular packaging investment, transferring certain IP to an external consortium while retaining an option for a minority stake if it commercializes.
• Institutional sentiment turned cautious after the Q3 update, possibly due to North American softness and flat guidance despite strong earlier stock performance.
• Analysts and investors are expected to monitor fourth-quarter execution, especially in Asia and North America, to validate the current growth trajectory.