Nichols reinstates dividend

Even so, the group has opted to reinstate the dividend – having withdrawn its final payout back in March – citing strong cost controls and efforts to preserve funds during the crisis such as the restriction of non-vital capital expenditure. Nichols’ net cash position rose from £40.9m at the December year-end to £46.8m and it remains debt-free. Management plans to treat 2019 and 2020 as a single dividend review period.

In the UK – Nichols’ largest market – revenues slumped by a fifth to £45.9m. However, pointing to data from research firm Nielsen, the group noted that brand value for its flagship ‘Vimto’ drink increased by 6.6 per cent year to date – superior to the soft drinks industry’s 1.3 per cent improvement.

Meanwhile, sales for Nichols’ international businesses contracted by 8.1 per cent to £13.3m. Still, the group said that in-market sales for the Middle Eastern market were resilient during the key Ramadan period – despite coronavirus confinement policies and the introduction of the anticipated sweetened beverage tax. In Africa, Vimto sales grew by 8.7 per cent to £8.3m.

That said, Nichols pointed to the development of the outbreak in Africa, and noted that uncertainty remains regarding the outlook for the rest of the year. The Covid-19 pandemic is affecting different countries at different times, and to varying degrees. It follows that management is not yet bringing back financial guidance for 2020 and beyond. In turn, house broker N+1 Singer has not reintroduced its own forecasts.