Despite the lack of a helping hand from the weather, these were good results from Nichols. The soft drinks maker grew UK first-half sales 8 per cent year-on-year, well ahead of industry growth of just 2.4 per cent – but its the fast-growing international business that underpins the premium share price rating.
Export sales climbed 14 per cent – a key factor in Nichols' ability to hold operating margins steady at 15 per cent, despite pressure on UK gross margins from continuing raw material costs increases and an intense promotional environment. New distribution agreements in the Middle East and Africa signed earlier this year have so far had little impact on sales, but chief executive Brendan Hynes said they would help Nichols maintain its impressive international growth rates.
Expansion of distribution is also key to continued outperformance in the UK. Mr Hynes pointed out that product penetration in the UK stands at just 20 per cent (Coca Cola's is closer to 70 per cent), and it's well into discussions with major retailers about further listings for new products such as its Levi Roots and Weight Watchers ranges and new Vimto variants.
Broker N+1 Brewin expects full-year pre-tax profit of £19.9m and EPS of 40.5p (2011: £18.1m/36.3p).
NICHOLS (NICL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 693p | MARKET VALUE: | £256m | |
| TOUCH: | 693-705p | 12-MONTH HIGH: | 745p | LOW: 505p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 18 | |
| NET ASSET VALUE: | 105p* | NET CASH: | £23.6m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 50.5 | 7.24 | 14.6 | 5.00 |
| 2012 | 55.4 | 8.26 | 16.9 | 5.62 |
| % change | +10 | +14 | +16 | +12 |
Ex-div: 1 Aug Payment: 31 Aug *Includes intangible assets of £13.7m, or 37p a share | ||||
