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

To continue reading, subscribe today

and enjoy unlimited access to the following:

  • Tips of the Week
  • Funds coverage
  • Weekly features on big investment themes
  • Trading ideas
  • Comprehensive companies coverage
  • Economic analysis
Subscribe to Investors Chronicle

Related topics

Subscribe today

Full access for just £3.37 a week:

• Tips and recommendations - to beat the market 
• Portfolio clinic & Mr Bearbull - build a well-planned portfolio 
• Expert tools - track and manage investments effortlessly
• Plus free delivery to your home or office

Subscribe Now