Vimto on form for Nichols as profits fizz 10%
PROFITS at drinks manufacturer Nichols, the name behind Vimto and other popular brands, jumped 10% in 2013 as its strategy of focusing on margins rather than volume sales paid off.
The group said its pre-exceptional earnings rose from £20.5m to £22.5m as sales nudged up by 2% to £109.9m.
Operating profit margins increased by 1% to 20%, while the group’s healthy balance sheet position was underlined by a 39% surge in net cash to £34.3m.
After exceptional items amounting to £3.7m – £1.7m related to management restructuring and the remainder a £2m provision for litigation in Pakistan, which Nichols is defending – bottom line profits were £18,8m, compared with £20.5m the year before.
Chairman John Nichols said the Haydock-based group had had “an excellent year”, and was positive on the outlook for 2014 with further investment in the brands, including a new Vimto TV campaign hitting screens in April.
He said: “We have successfully delivered on our strategy to increase our profitability and, pre-exceptional items, we have delivered double digit growth to both profit before tax and earnings per share. The business continues to be highly cash generative and we propose a final dividend of 13.3p, taking the total dividend for the year up 13% to 19.62p.
“Although economic indicators suggest signs of optimism, there is evidence that consumer spending in the UK remains cautious and we expect the UK retail market to remain challenging in 2014. Despite this environment we are confident that the group can maintain its strong performance into 2014. “
Chief executive Marnie Millard, who took over at the helm of the business last year, said she was pleased with performance, with Vimto sales out-performing the UK market with 4.3% growth, despite a strategy to decrease promotional activity.
She added that during the hot summer of 2013 – the best since 2006 – Nichols had seen a 20% uplift in sales, and had maintained “exemplary” service standards to customers.
Originally sold as a health tonic, Vimto is now sold in more than 60 countries, with sales in Africa rising 21% last year. Other brands in the portfolio include a Levi Roots range, Weightwatchers drinks and most-recently an extreme sports and energy drinks product targeted at 18 to 24-year-olds men.
