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The Aim 100 2018: 30 to 21

The Aim 100 2018: 30 to 21

30. Nichols

Geopolitical risk doesn’t jump out as an obvious concern for investors in a company that makes juice and soft drinks. But the civil war in Yemen prevented the delivery of some higher-margin concentrated beverages from Nichols (NICL). Add in cost inflation and investors can see why the gross margin contracted last year by 4.8 percentage points to 45.6 per cent. Tensions in Yemen are ongoing, so investors will be wondering what further impact this could have considering the Middle East represents around 10 per cent of group sales. A more obvious concern for a beverage company is the UK’s sugar tax on soft drinks that recently came into effect. But reformulations have meant that Nichols’ entire UK own portfolio is now under the level of sugar where the levy kicks in. Analysts reckon this could put the company in a more competitive position against peers that will be affected by the tax, or perhaps allow it to push through some price increases of its own. Hold. JF

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