Nichols' (NICL) half-year results were slightly overshadowed by an £8m exceptional cost after the beverage company lost a litigation claim brought by a Pakistani distributor. The sum was much higher than Nichols had anticipated and "completely out of proportion", complains finance director Tim Croston.
Luckily, this isn't impacting Nichols' growth plans. Exceptional costs aside, pre-tax profit grew 11 per cent to £10m during the half, while operating margins swelled from 16 to 18 per cent, as the company's strategy to focus on value over volume began to bear fruit. UK sales growth of 8 per cent far surpassed the 2.7 per cent increase in the wider market.
Overseas revenue fell 12 per cent, but that was entirely due to the timing of Ramadan, which moves forward by 10 days each year. In-country sales of Vimto are actually running 7 per cent ahead of last year in the Middle East, and growth is expected to pick up considerably in the second half. Mr Croston explains that drinking Vimto over Ramadan is akin to eating turkey at Christmas, with 18 per cent of sales occurring around the holiday. Vimto is a premium drink in the Arabian peninsula, sold in fancy glass bottles: rather than offering guests a nice bottle of wine, a Saudi family might have Vimto on the table.
Broker N+1 Singer expects adjusted pre-tax profit of £24.4m for the full year, up from £22.5m in 2013.
NICHOLS (NICL) | ||||
---|---|---|---|---|
ORD PRICE: | 952p | MARKET VALUE: | £ 352m | |
TOUCH: | 945-960p | 12-MONTH HIGH: | 1,240p | LOW: 870p |
DIVIDEND YIELD: | 2.1% | PE RATIO: | 40 | |
NET ASSET VALUE: | 137p* | NET CASH: | £32.9m |
Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2013 | 55.2 | 9 | 18.8 | 6.32 |
2014 | 56.6 | 2 | 4.2 | 7.1 |
% change | +3 | -77 | -77 | +12 |
Ex-div: 30 Jul Payment: 29 Aug *Includes intangible assets of £16.4m or 44p a share |