Zoetic International PLC (LON:ZOE) saw its shares jump on Friday as it predicted that distribution agreements agreed and that it is close to signing will lead to a “substantial increase” in sales of its Chill brand of cannabidiol (CBD) products in the US market.
In a trading update, the CBD firm said the Chill brand’s focus on the tobacco replacement market is expected to be “especially attractive” as health concerns were exacerbated by the coronavirus pandemic, adding that it has also commenced negotiations for distribution of Chill products to two overseas markets.
Zoetic also said it hopes to conclude “further significant distribution contracts” in the first quarter of its current financial year.
Meanwhile, the company said that through its strategic partnership with the Schrader family – Zoetic’s largest shareholder and owner of US-wide convenience store network of distribution businesses Ox Distributing – it has agreed outline terms for a new multi-state distribution agreement to place Chill brand products in US convenience stores, with the deal expected to be signed in the current quarter.
Zoetic added that its prospective wholesale hemp seed business has made “significant progress towards commercialisation”, with negotiations having commenced on distribution agreements for seeds both in the US and overseas.
The group is also engaged with a major US university to identify “particularly attractive seed strains within its product offerings”.
In the UK, the company said its Zoetic branded product range has been shortlisted for the “Top Sante Skincare Awards” in the UK, recognising the group’s “innovative use of CBD in beauty products”.
Meanwhile, the group said it has continued a substantial cost-reduction exercise within its oil & gas business, with further savings expected by the end of the first quarter.
There are no revenues currently being generated by the business due to low domestic oil prices in the US, with the firm adding that it is continuing to seek an exit from the business and several negotiations were currently in progress.
“We cannot be more pleased with the amount of demand we are receiving from large distributors for the Chill brand. When this pandemic is over, we will be well positioned to expand the brand’s distribution footprint both in the US and internationally”, Zoetic co-chief executive Antonio Russo said in the statement.
Fellow co-chief executive Trevor Taylor added that the recent restructuring was “providing an immediate positive impact on the company.”
He said: Under the new structure decisive strategic decisions are being made at a pace much more aligned with shareholder expectations”.
Zoetics’ shares surged 18.9% higher to 4.9p in early deals on Friday.
Published at Fri, 15 May 2020 07:30:00 +0000-Zoetic surges as it predicts substantial increase in sales of Chill products in US market