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Nichols (NICL)

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Nichols interim profit and revenue rise, dividend hiked

17 Jul 19

LONDON (ShareCast) - (Sharecast News) - Vimto maker Nichols reported a rise in interim revenue and profit on Wednesday thanks to growth in the UK and international markets, as it announced the departure of its chief financial officer.
In the half year to the end of June, pre-tax profit edged up 2% to 13.3m on revenue of 71.6m, up 10.2% from the same period a year ago. Earnings per share increased 2.8% to 29.63p and the company lifted its dividend by 9.7% to 12.4p.

Revenue from still products was up 11.6% during the half to 33.9m, driven by Vimto dilute in the UK and Vimto concentrate sales to the Middle East. Meanwhile, sales of carbonate products rose 8.4% to 37.7m thanks in part to the group's performance in Africa.

In international markets, Nichols said sales were "strong", albeit against softer prior year comparatives, with international revenue rising to 14.5m from 11.2m the year before. UK revenue was up 6.2% at 57.1m, with Vimto sales 4% higher against very strong prior year comparatives.

The drinks company's operating profit margin fell to 18.6% in the half from 20.1% the year before.

"The board is pleased with the group's performance in the first six months of 2019 in both our UK and international markets," the company said.

"While UK trading conditions are expected to remain challenging, as a result of the group's diversified business model and sales momentum, the board is confident that full year earnings will be delivered in line with its expectations."

Nichols also said on Wednesday that CFO Tim Croston plans to step down by the end of June 2020 after 10 years in the role.

"The notice that Tim has given the board affords sufficient time to ensure a smooth transition to his successor, with the recruitment process commencing immediately," it said.

Russ Mould, investment director at AJ Bell, said the results are "perfectly solid" but the drop in the operating margin "does give a little pause for thought".

"This may reflect investment in ongoing product development, as a result of the sugar tax, and also marketing to maintain brand recognition and defend the company's competitive position. AG Barr noted it had gone on a volume drive and positioned its soft drinks on a value basis for consumers and it is possible that Nichols and other rivals have had to respond in kind, promoting their wares either through brand, price or both.

"However, an 18.5% operating margin is still an excellent return on sales and one that underpins high returns on capital employed and permits further investment in brand and product to drive future growth. Such strong margins can also drive cash flow which in turn drives dividend payments."

At 1100 BST, Nichols shares were up 3.7% at 1,690p.

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.


Market Data

Currency UK Pounds
Price 1,350.00p
Change Today -50.00p
52 Week High 1,880.00p
52 Week Low 1,322.50p
Volume 11,406
Shares Issued 36.88m
Market Cap 497.93m


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Ex-Div 19-Mar-20 25-Jul-19
Paid 01-May-20 30-Aug-19
Amount 28.00p 12.40p