Full-year numbers for Nichols (NICL) were held back by a legal settlement on a claim from a drinks licensee in Pakistan. Operating profits came in at £17.8m, a 5 per cent fall from 2013. But strip out the court battle and strong earnings growth underpinned yet another double-digit increase in the annual dividend. Critically, gross margins remain strong.
The maker of the Vimto, Panda and Sunkist soft drink brands was ordered to pay £7.8m to Gul Bottlers in Pakistan after an unsuccessful claim on Gul's right to manufacture and distribute Vimto cordial in the country. The problems in Pakistan aside, however, Nichols' strategic focus on foreign markets continues to bear fruit. International sales were up 4.3 per cent to £24m, driven by a strong trading performance in the Middle East. Nichols supplies Vimto concentrate to its bottling partner Aujan Coca-Cola, which then distributes it across the region, one of the cordial's strongest markets.
Management admitted that high-street conditions in the UK remain challenging, particularly as the threat to the nation's health from sugar-based drinks becomes more widely accepted. However, Nichols stressed that less than a quarter of overall sales are made through the major UK retailers, while its growth markets are not yet focused on health issues.
N+1 Singer predicts adjusted EPS of 57.5p for this year, against 55p in 2014.
| NICHOLS (NICL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,100p | MARKET VALUE: | £407m | |
| TOUCH: | 1,100-1,101p | 12M HIGH / LOW: | 1,175p | 835p |
| DIVIDEND YIELD: | 2.0% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 157p* | NET CASH: | £34.5m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 84.0 | 15.1 | 29.6 | 13.6 |
| 2011 | 99.0 | 18.1 | 36.3 | 15.3 |
| 2012 | 108 | 20.5 | 41.4 | 17.3 |
| 2013 (restated) | 106 | 18.8 | 38.3 | 19.6 |
| 2014 | 109 | 17.9 | 38.4 | 22.4 |
| % change | +3 | -5 | - | +14 |
Ex-div: 2 Apr Payment: 5 May *Includes intangible assets of £16.4m, or 44p a share | ||||
