Nichols Plc – 2017 Trading Update

We anticipate Group sales for the year ending 31 December 2017 to continue the strong trend reported at the half year. This sales performance is again being delivered from both our UK and international business.

 

UK sales of the Vimto brand are 9.0% ahead of the prior year (as at November 2017). This performance is significantly ahead of the UK market growth of 2.3% (Nielsen year to date 2 December 2017). As previously reported, this strong sales performance helps mitigate the margin impact from the increased input costs affecting the industry.   

 

Internationally, our business in Africa has again delivered an excellent performance with full year revenues anticipated to be in excess of 20% ahead of the strong prior year comparatives.

 

Whilst 2017 sales are still expected to be ahead of the prior year, the recent escalation of hostilities in Yemen has resulted in the supply route to our Yemeni customer being blockaded. Therefore, at this time we are unable to send any further Vimto concentrate shipments that were planned for December 2017. As a consequence, management currently expects adjusted Group Profit Before Tax for the year ending 31 December 2017 to be in line with the prior year.

 

 

Outlook 

 

For the year ahead, we are confident that the strong sales trend will continue in the UK with the Vimto brand being supported by a new marketing campaign launching in the spring. In addition, we are well prepared for the introduction of the Sugar Levy with 100% of the Vimto and Feel Good brands portfolio already below the levy threshold.

 

In our international business, we anticipate the strong growth trend in Africa to continue in 2018. However, the current conflict in the Yemen coupled with some reported slowing in the Saudi economy indicates that sales to the Middle East region in the year ahead are likely to be less than previously anticipated. As a result, management currently expects low single digit percentage profit growth in 2018 in comparison to the current year.

 

In summary, our diversified business model is expected to deliver continued sales growth into 2018 and the Group remains highly profitable. In addition, our strong balance sheet and cash generation supports ongoing investment in our growth strategy and our ability to sustain a progressive dividend policy.     

 

The Group's Preliminary results will be announced on 1 March 2018.

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