Margin focus sees Nichols’ profits fizz 9%
FOCUSING on margins rather than sales volumes in a promotion-led fizzy drinks market paid off handsomely for Vimto maker Nichols as half-year profits jumped 9% to £9m.
The Newton-le-Willows-based group, founded in Manchester more than a century ago, described its performance in the six months to end of June as “very strong” and promised more of the same for the full-year.
Turnover in the period was flat at £55.2m (£55.4m in 2012) as the group focused on its margins rather than competed aggressively on price to raise volumes.
Non-executive chairman John Nichols said: “The group has maintained its growth momentum delivering increases in margin, profit, earnings per share and net cash generation.
“During the period we were delighted to sign an exclusive agreement to add Extreme Sports and Energy to our brand portfolio, marking the group’s entry to the high-growth energy market.
“We will continue with our strategy of introducing further new products and entering new international markets whilst importantly continuing to invest in our existing core brands.”
Mr Nichols said the company had decided to protect UK gross margins by reducing its promotional participation in the heavily discounted carbonate category and growing market share in the still category, and this had been successful.
As well as Vimto, which is sold in more than 65 countries, Nichols’ brands include Levi Roots, Weight Watchers, Sunkist, Panda and Extreme Sports and Energy which are sold in the UK.
International sales in the period grew 2% in the period, with further growth in African markets, offset by lower sales of concentrate to the Middle East.
The move into the energy drinks market is still at an early stage. After signing an exclusive licence from the Extreme Sports Company, products were launched in June was via Nichols’ cash & carry and wholesale customers.
The company announced a 13% increase in its interim dividend to 6.32p per share, which its said reflects the “robust results, strong balance sheet and the board’s ongoing confidence for the future”.
