5th Mar 2015 09:13
LONDON (Alliance News) - Soft drinks company Nichols PLC Thursday said its 2014 profit was hit by litigation settlement costs relating to a claim from a licensee in Pakistan, but said underlying growth in the business was good, having delivered sales growth in what it said is a challenging soft drinks market globally.
The Vimto, Sunkist and Panda drinks maker reported a pretax profit of GBP17.9 million for 2014, lower than the GBP18.8 million it reported in 2013, after it was hit by a GBP7.8 million in settlement costs, having been ordered to pay Gul Bottlers Ltd after unsuccessfully defending a claim relating to Gul's rights to manufacture and distribute Vimto cordial in Pakistan.
Excluding the litigation costs, Nichols pretax profit was up 14% at GBP25.7 million from GBP22.5 million in 2013, buoyed by a 3.5% increase in revenue to GBP109.2 million from GBP105.5 million the year before.
The group said it was "pleased" with the sales growth, amidst challenging overall market conditions, while its gross margin has remained robust.
"2014 was another strong year for Nichols as the group once again outperformed the wider soft drinks market on its way to delivering double-digit operating profit growth, pre-exceptional items. This strong outcome is again underpinned by the strength and heritage of our core Vimto brand both in the UK and internationally, as well as the diversity of our products and markets," said Non-Executive Chairman John Nichols in a statement.
The group proposed a final dividend of 15.3 pence, taking its total dividend for 2014 to 22.4 pence per share, a 14% increase on last year's payout.
"We remain focused on delivering our growth strategy both in the UK and internationally and we look forward to the year ahead with confidence," Nichols added.
In the UK, Nichols total sales increased 3.3%, which it said outperformed the soft drinks market growth of 0.4%. Sales of the group's Still products grew by 5.3% to GBP56.1 million, driven by its Vimto brand.
"Despite the ongoing challenges within the UK grocery sector, our UK sales again outperformed the soft drinks market and in particular the Vimto brand performance was strong. General consensus suggests that the UK grocery market will continue to be challenging into 2015," said Nichols.
However, Nichols emphasised that the group has a diverse income stream, with less than 25% of overall sales coming from some of the big, major UK retailers.
In 2014, Nichols said its international sales rose 4.3% to GBP24.1 million, driven by a strong trading performance in the Middle East, on the back of strong in-country demand for the brand. Elsewhere sales to its African markets increased 3.9% at actual exchange rates.
"As we progress into 2015, we will continue to deliver our growth strategy, including further investment in our brands and markets both in the UK and overseas," said Nichols.
Nichols said that having increased sales, profit and maintained a robust balance sheet in 2014, it expects a similar trend for 2015.
Shares in Nichols were trading 0.9% higher Thursday morning at 1,087.20 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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