Revenues at Nichols (NICL) were flat in the half-year, but this was already expected and is part of a strategy announced at the start of 2013 to focus on profit, rather than sales, in the UK.
So far, management has delivered on this plan. Scaling back UK promotional activity, particularly in the carbonates category, delivered an increase in revenue per case, higher profit and better margins. Indeed, the group operating profit rose 7 per cent to £8.9m, and the margin widened 110 basis points to 16.1 per cent.
In Africa, distribution partnerships with the Coca-Cola Bottling Company are really starting to bear fruit and boosted sales, although this was partly offset by weaker sales in the Middle East, leaving international revenue up 2 per cent.
On the product side, Nichols was given the exclusive right to add the Extreme Sports and Energy drinks to its brand portfolio and new products are in the pipeline for the first quarter of 2014. This will include fresh packaging formats and new products in the Levi Roots range. By this time, Nichols is also planning to have entered two new markets.
Broking house Panmure Gordon has boosted EPS forecasts for 2013 from 45p to 47p, rising to 50.7p in 2014 (from 41.4p in 2012).
| NICHOLS (NICL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,058p | MARKET VALUE: | £391m | |
| TOUCH: | 1,050-1,064p | 12-MONTH HIGH: | 1,117p | LOW: 681p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 129p* | NET CASH: | £31.2m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 55.4 | 8.26 | 16.9 | 5.62 |
| 2013 | 55.2 | 9.00 | 18.8 | 6.32 |
| % change | - | +9 | +11 | +12 |
Ex-div:31 Jul Payment:30 Aug *Includes intangible assets of £15.9m or 43p a share | ||||
