Faced with cost input increases and regional supply chain issues, soft drinks group Nichols (NICL) did well to deliver solid revenue growth in 2017. Pre-tax profits before exceptional items were flat at £30.5m, as the aforementioned challenges weighed on the gross margin. Exceptional costs of £1.8m stemmed from M&A activity and preparation for the sugar tax levy.
The larger UK segment grew sales by 11 per cent to £100m - buoyed by a 9 per cent improvement for the company’s Vimto brand, which significantly outpaced the market growth rate of 2.2 per cent. Elsewhere in the domestic market, revenues for the ‘out of home’ division grew by 21.5 per cent to £38.9m – largely thanks to Nichols’ purchase of its largest distributor in the North of England, DJ Drink Solutions.
International revenues were up 20.4 per cent to £32m, supported by strong growth in Africa. The civil war in Yemen prevented the shipment of Vimto concentrate to the country in December, but Middle Eastern sales still rose by 13 per cent. However, management says concentrate sales here do fluctuate, as key shipment dates – dictated by the timing of Ramadan - can fall before or after the group’s year-end .
Analysts at N+1 Singer forecast adjusted pre-tax profits of £31.3m and EPS of 69.2p per share for 2018, up from £30.5m and 67.7p respectively in 2017.
| NICHOLS (NICL) | ||||
| ORD PRICE: | 1,575p | MARKET VALUE: | £ 581m | |
| TOUCH: | 1,535-1,575p | 12-MONTH HIGH: | 1,961p | LOW: 1,386p |
| DIVIDEND YIELD: | 2.1% | PE RATIO: | 25 | |
| NET ASSET VALUE: | 269p* | NET CASH: | £36.1m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 106 | 18.8 | 38.3 | 19.6 |
| 2014 | 109 | 17.9 | 38.4 | 22.4 |
| 2015 | 109 | 28.0 | 60.3 | 25.6 |
| 2016 | 117 | 31.5 | 69.1 | 29.3 |
| 2017 | 133 | 28.7 | 62.9 | 33.5 |
| % change | +13 | -9 | -9 | +14 |
| Ex-div: | 22 Mar | |||
| Payment: | 04 May | |||
| *Includes intangible assets of £39m or 105p per share | ||||
