Vimto firm Nichols sees profit plunge 80%

Merseyside-based Vimto and soft drinks firm Nichols plc said on Wednesday its profit before tax plunged 79.8% to £6.5 million and revenue fell 19.3% to £118.7 million in the 12 months to December 31, 2020.

The company’s 2021 guidance remains withdrawn.

Nichols’ other brands include Feel Good, Starslush, ICEE, Levi Roots and Sunkist.

The arrival of the pandemic in our markets at the end of Q1 was a watershed moment for the year,” said Nichols chairman John Nichols.

“The introduction of social distancing, the enforced closure of the group’s Out of Home (OoH) customers and the various lockdown measures introduced across the globe materially impacted our business.

Q2-Q4 2020 revenues were 26.1% lower compared to the prior year.”

The company said Vimto brand “in-market” sales in the Middle East remained resilient through Ramadan despite a Sweetened Beverage Tax (SBT) and Covid-19 restrictions and Vimto in Africa delivered strong revenue growth of 7.4%, with progress across “the rest of the world” delivering revenue growth of 17.3%.

However, its “Out of Home” business was significantly impacted by the pandemic, with revenues down 61.4% and fixed costs “weighing heavily on overall financial performance.”

On its dividend policy, Nichols said: “In March 2020, the board made the decision to withdraw the final dividend (28.0p) for 2019, due to the uncertainties concerning the financial impact of Covid-19.

“At the half year, the board agreed the rebalancing of dividend policy to consider the two financial years 2019 and 2020 as a single review period and paid 28.0p, as the interim dividend for 2020, in September 2020.

“In the second half year, the board has agreed to evolve the dividend policy to reflect the balance of shareholder needs and the clear opportunities for growth that will exist in the soft drinks market post the pandemic.

“Dividend cover going forward will move to broadly 2x.

 “Therefore, the final dividend proposed is 8.8p, which will become ex-dividend on the 25 March and paid subject to shareholder approval on 6 May 2021.”

Nichols chairman John Nichols said: “The Covid-19 pandemic presented us with unequalled challenges in 2020 and our first and most important objective through this unprecedented period has been the protection and wellbeing of our employees and customers.

“Throughout these difficult times, our colleagues have consistently demonstrated their values and commitment to our business, and I would like to wholeheartedly thank everyone for their efforts.

The strength of the Vimto brand, the group’s robust balance sheet and our diversified business model has ensured a resilient financial performance in the period despite the challenging trading conditions across our markets.

“We have achieved significant outperformance from the Vimto brand in the UK, solid growth in Africa and a good performance in the Middle East despite the impact of the recently introduced Sweetened Beverage Tax (SBT) and Covid-19 restrictions. 

Whilst recognising the current and near-term impact of the pandemic on the soft drinks market, the board continues to believe that Nichols, underpinned by the strength of the Vimto brand, the group’s diversified business model and the skill and commitment of our colleagues, remains well placed to deliver its long-term strategic ambitions.

“Given the continued near-term uncertainty, 2021 guidance remains withdrawn.”

 

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Mark McSherry
Dalriada Media LLC sites are edited by veteran news journalist Mark McSherry, a former staff editor and reporter with Reuters, Bloomberg and major newspapers including the South China Morning Post, London's Sunday Times and The Scotsman. McSherry's journalism has also appeared in The Washington Post, The Guardian, The Independent, The New York Times, London's Evening Standard and Forbes. McSherry is also a professor of journalism and communication arts in universities and colleges in New York City. Scottish-born McSherry has an MBA from the University of Edinburgh and a Certificate in Global Affairs from New York University.