Nichols’ performance in the “challenging” UK soft drinks market was “interesting” with Vimto seeing stills growth of 4% – comfortably ahead of the market – and a 7% decline in the promotionally led carbonates category, market analyst Shore Capital said.
It has been a tough year for the soft drinks sector as lobby groups have called for a reduction in sugar levels and a sugar tax.
International sales increased by 1.5% and group revenue was flat at £109.3M, Shore Capital reported.
Value over volume strategy
“However, it is a little light on our forecast of £113.2M but the shortfall seems to be due to adverse effects on international sales and the value over volume strategy in the UK,” Shore Capital analyst Phil Carroll said.
Carroll predicted Nichols could secure growth in 2016 through making the right acquisitions.
Nichols' results in numbers
- £109.3M in revenue
- £84.9M in UK sales
- £24.4M in export sales
Nichols non-executive chairman John Nichols said the firm had maintained its value over volume strategy over the year in the UK.
“Group 2015 sales performance is per our expectations and whilst the UK market remains challenging, our international business has continued to deliver good growth,” he said.
Profit and earnings ahead of prior year
“We expect full year profit and earnings per share to be ahead of the prior year and in line with market expectations.
“Reported export sales in the year totalled £24.4M, an increase of £0.4M. This was despite the difficulties in shipping to Yemen, due to the ongoing conflict in the region.”
Market analyst N+1 Singer said Nichols’ trading update built further confidence that international diversification and a focus on value over volume could continue to deliver good sustainable earnings growth.
It estimated 8.5% growth for the soft drinks manufacturer driven by acquisitions, new product development initiatives earmarked for Vimto and ongoing international progress.
“In a stagnant soft-drinks market this growth is highly commendable,” it added.
Nichols brands include: Vimto, Levi Roots (drinks), Feel Good, Sunkist and Panda.