Amidst challenging UK trading conditions, soft drinks maker Nichols (NICL) saw its first-half operating profit increase by just 2.1 per cent to £72m. A 1.5 percentage point margin squeeze came on the back of investment in infrastructure and adverse currency movements.
The signature Vimto range continued to drive momentum in still beverages - UK sales of the dilute product and Middle Eastern demand for the concentrated version boosted revenue by 12 per cent to £34m. That said, against a record hot summer last year, Vimto sales growth was more muted at 4 per cent, reflective of a wider slowdown in the domestic soft drinks market. Overall, UK revenue increased by 6.2 per cent to £57m.
There’s no mention this time around of the ongoing conflict in Yemen, which has previously affected shipment timings to Saudi Arabia. Versus a weak comparison period, international sales surged by 30 per cent to £14.5m, with Middle Eastern revenue more than doubling to £4.6m. With strong execution in core markets, sales to Africa grew by 12.6 per cent to £7.6m, propelling growth in carbonated drinks.
Numis expects adjusted pre-tax profit of £33m and EPS of 73.3p for the 2019 full year, rising to £35.8m and 79.6p in 2020.
| NICHOLS (NICL) | ||||
| ORD PRICE: | 1,700p | MARKET VALUE: | £627m | |
| TOUCH: | 1,625-1,700p | 12-MONTH HIGH: | 1,840p | LOW: 1,230p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 24 | |
| NET ASSET VALUE: | 307p* | NET CASH: | £29.5m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 65.0 | 13.1 | 28.8 | 11.3 |
| 2019 | 71.6 | 13.3 | 29.6 | 12.4 |
| % change | +10 | +2 | +3 | +10 |
| Ex-div: | 25 Jul | |||
| Payment: | 30 Aug | |||
| *Includes intangibles of £47m, or 127p a share | ||||
