Nike is the largest sportswear company in the world, generating revenues of more than £15billion a year from shoes and trainers alone.
The group prides itself on working with the best suppliers globally, especially when it comes to high-performance gear, worn by medal-winning athletes.
Zotefoams is one of those suppliers, a business based in Croydon, South London and the mastermind behind a set of unique foams that are exceptionally light, resilient and environmentally friendly.
The Natural History Museum (pictured) and British Museum use Zotefoams materials to store precious artefacts in their vaults
Carmakers, including Daimler Benz, BMW and Toyota, use the foam as a sealant as well, while biotech businesses and hospitals use the foam in clean rooms because it is does not absorb moisture, it does not burn and it inhibits bacterial growth.
Zotefoams’ technology is in demand and the group has customers in more than 50 countries, with manufacturing plants not just in Croydon but also in Kentucky.
Last year too, chief executive David Stirling raised £20million on the stock market to build a new site in Poland, expected to be up and running in 2020.
Further expansion is likely in America and Stirling is keen to increase sales in Asia, having already established a base in China, where revenues are growing fast.
Although most of Zotefoam’s business comes from materials manufactured in-house, Stirling also licenses technology to other firms, including consumer goods giant Unilever.
That company uses Zotefoam’s processes to reduce plastic consumption – Dove body wash dispensers for example are made with 17 per cent less plastic through the application of Stirling’s technology.
Other firms are catching on to this idea, including yogurt producers in Japan and dairy groups in South America.
Over time, Stirling hopes to attract more customers from the food industry, having recently developed a cost effective foam especially suited for this sector.
Zotefoams 2018 results are out on Tuesday and analysts expect revenues to increase by 14 per cent to £80million with profits up more than 17 per cent to £10.8million. The outlook is promising as well, with profits of £13.7million pencilled in for this year and £16.6million in 2020.
Stirling pays a dividend, forecast at 6.2p for 2018, but the group is focused on growth so surplus cash is largely ploughed back into the business to boost profits over the longer term.
Midas verdict: At £5.92, Zotefoams shares could be considered expensive relative to peers. However, the stock has come off from more than £7 at the end of last year, the business is growing fast and exemplifies British innovation and drive at its best. An attractive buy, particularly for long-term investors.