Nichols 2019 trading in line; reiterates 2020 warning

Vimto maker Nichols said on Thursday that pre-tax profit for the year to the end of December was set to be in line with market expectations but reiterated its warning from the end of last year that profit for 2020 could be materially below market expectations.

The drinks maker said revenue increased 3.6% over the year to £147.2m amid growth across all three areas of the business. UK sales rose 2.7% from the previous year to £117.7m, with Vimto brand sales 0.8% higher against a very strong prior year comparative and in line with the overall soft drinks market, Nichols said.

Out of Home sales were up 8.4% to £45.7m, driven by the acquisition of Adrian Mecklenburgh in February last year and new sales of the ICEE brand frozen beverage in the second half of the year.

International revenue grew 7.5% to £29.5m, with sales to the Middle East up 20.6% at £11.6m.

"In summary, the board is very pleased with the group sales performance and we currently anticipate full year profit before tax to be in line with market expectations," it said.

However, the outlook for 2020 was less cheery. Nichols said it remained in line with the trading update released on 23 December, in which the company warned that pre-tax profit would be "materially below" market expectations as sales take a hit from sugar taxes in the United Arab Emirates and Saudi Arabia.

It noted at the time that authorities there had implemented an excise tax of 50% to be levied on the retail price of non-carbonated sweetened drinks.

"This tax will be applied to all non-carbonated drinks containing either natural or artificial sweeteners, including sales of Vimto products. Therefore, unlike the UK soft drinks levy, product reformulation is not an option," Nichols said in the December update.

"Whilst it is difficult to estimate the future effect on sales volumes of the Vimto brand in these regions, at this point in time, we have to assume the increased retail price will have a negative impact from 2020."

At 1250 GMT, the shares were down 0.2% at 1,410p.