Nichols reports on encouraging revenue and earnings growth as Out of Home recovers from pandemic

Nichols , the diversified soft drinks Group, announces its unaudited Interim Results for the half year ended 30 June 2022.

 Half year ended30 June 2022Half year ended30 June 2021 Movement
Group Revenue80.267.4+19.1%
Adjusted Operating Profit11.29.0+24.2%
Operating Profit10.08.8+14.6%
Adjusted Profit Before Tax (PBT)11.38.9+26.7%
Profit Before Tax (PBT)10.18.6+17.0%
Adjusted PBT Margin14.0%13.2%+0.8ppts
PBT Margin12.6%12.8%(0.2ppts)
Adjusted Earnings per Share (basic)24.80p19.52p+27.0%
Earnings per Share (basic)22.22p18.93p+17.4%
Cash and Cash Equivalents49.256.7(13.2%)
Return on capital employed25.2%14.6%+10.6%
Interim Dividend12.4p9.8p+26.5%
  • Vimto Brand value in the UK +5.7%
    • Vimto continues to outperform the dilutes market, by +9.1%
  • UK revenues increased by 29.3% to £62.6m (H1 2021: £48.4m)
    • UK Packaged route to market volume flat versus UK soft drinks down 4.3% as consumer spending slows
    • Out of Home (OoH) continues to recover from the pandemic, with revenues +131.9%

      Strategic review of OoH progressing

  • International revenues -7.2% to £17.6m (H1 2021: £19.0m), (Q2 +4%)
    • Middle East phasing of shipments largely weighted to H2

      ‘In-market’ volume of cordial Oct to Apr, +10%, post completion of marketing investment

  • Continued progress in Africa, +2.0%

      Q2 +11%, Q1 -4% impacted by national driver industrial action in Spain  

  • US shipments constrained through 2022 due to ongoing container shortages
  • Gross margin 42.8% (H1 2021: 44.4%)
    • Higher proportion of lower margin UK carbonate revenues as OoH recovers
  • Exceptional charge of £1.2m largely relating to Operational Change Programme
    • Transfer of Dilutes contract manufacturing successfully completed
  • Strong cash and cash equivalents at £49.2m (31 December 2021: £56.7m)
    • Completion of the Group’s treasury share buyback programme (H1 2022 spend £5.5m)
      • Facilitates the Group’s SAYE Option Scheme and/or Long-Term Incentive Plan
    • Renewed post pandemic working capital investment, net £5.9m outflow
  • Interim dividend of 12.4p, +26.5% (H1 2021: 9.8p)
  • 2022 Group expectations remain unchanged 
    • Significant and accelerating inflationary pressures, particularly ingredient and packaging costs
    • Customer, supplier and operational mitigation actions underway

John Nichols, non-executive chairman, commented: “I’m pleased to report an encouraging financial performance in the first half of the year with 27% increases to both Adjusted PBT and the half year dividend. In the UK, the Vimto brand continues to outperform the broader squash market, and the Group’s Out of Home route to market experienced good growth as the wider leisure sector continues to recover from the impact of the pandemic. After some disruption to shipments affecting our International business in Q1, I am pleased to report a recovery in Q2 which has so far continued into the second half of the year.

“Whilst the Group is not immune to the significant and accelerating inflationary pressures impacting the consumer and the soft drinks market, we have taken swift mitigating actions where possible and the Group’s Adjusted PBT expectations for the full year remain unchanged. The Board remains mindful of the potential earnings impact of continued inflation into FY23 and beyond. We have a long-term track record of growth, a proven, diversified strategy, and a quality range of brands. All of this is underpinned by a strong balance sheet. As a result, the Board remains confident that the Group is well positioned to deliver its long-term growth plans.”