Nichols plc, the diversified soft drinks Group, is pleased to announce its unaudited Interim Results for the half year ended 30 June 2024
Nichols plc, the diversified soft drinks Group, is pleased to announce its unaudited Interim Results for the half year ended 30 June 2024 (the ‘Period’), with trading during the Period continuing to progress strongly, reflecting the ongoing delivery of the Group’s strategic priorities.
Key Financials
| Half year ended30 June 2024 | Half year ended30 June 2023 | Movement | |
| Group Revenue | £84.0m | £85.5m | -1.8% |
| Adjusted Operating Profit1 | £13.1m | £11.5m | +14.1% |
| Adjusted Profit Before Tax (PBT)1 | £14.5m | £12.3m | +18.0% |
| Operating Profit | £10.4m | £10.3m | +0.5% |
| Profit Before Tax (PBT) | £11.8m | £11.2m | +5.8% |
| Adjusted Operating Profit Margin1 | 15.6% | 13.4% | +220bps |
| Adjusted PBT Margin1 | 17.3% | 14.4% | +290bps |
| Operating Profit Margin | 12.4% | 12.1% | +30bps |
| PBT Margin | 14.1% | 13.0% | +110bps |
| Adjusted Earnings per Share (basic)1 | 29.87p | 25.70p | +16.2% |
| Earnings per Share (basic) | 24.29p | 23.31p | +4.2% |
| Cash and Cash Equivalents | £70.3m | £56.1m | +25.2% |
| Free cash flow2 | £9.0m | £5.4m | +65.4% |
| Adjusted Return on capital employed3 | 27.1% | 25.9% | +120bps |
| Interim Dividend per share | 14.9p | 12.6p | +18.3% |
| Special Dividend per share | 54.8p | – | – |
Andrew Milne, Chief Executive Officer of Nichols, commented:
“I am pleased to report further strategic progress in the first half, resulting in strong double digit increases in adjusted profit before tax and adjusted earnings per share. As a result of our progress, the Board’s high levels of confidence in the outlook and the strength of our balance sheet, we are pleased to announce a special dividend of 54.8p per share – which equates to a total of £20m – alongside an 18% increase in the interim dividend to 14.9p per share. This reflects a long history of strong cash flow generation and the Board’s commitment to delivering attractive shareholder returns.
Positive trading momentum in our UK Packaged business reflected further market share gains in squash and carbonates, driven by increased marketing investment, growth from innovation, and distribution gains. Our biggest ever UK promotional campaign was launched towards the end of the Period, and we are confident this will support the continued growth of the Vimto brand over the summer.
Whilst mindful of continued pressure on consumer spending, despite levels of inflation stabilising, our diversified business model and the enduring strength of the Vimto brand have enabled us to deliver a strong performance. As a result, we now expect full-year profitability to be slightly ahead of current market expectations and we remain confident that Nichols is well placed to deliver its strategic growth ambitions.”
Strategic highlights
UK Packaged
· Strong market share growth in the UK driven by both squash and carbonate categories
· The Vimto brand achieved its highest ever UK annual retail sales value of £109m4, reflecting increased marketing investment and growth from innovation and distribution gains
International Packaged
· Strong in-market execution across the Middle East during the key Ramadan trading period
· Commenced phased can production in Senegal, enabling us to better serve this key market in West Africa by bringing production closer to the end consumer, with benefits expected to be delivered in H2
Out of Home (OoH)
· Implementation of the OoH strategic review was largely concluded in the Period, delivering significant improvements in profitability
Financial highlights
· UK Packaged revenues +5.3% to £45.4m (H1 2023: £43.1m)
– Underpinned by volume growth of 4.9%, reflecting product innovation, distribution gains and increased marketing investment
· International Packaged revenues -6.9% to £20.0m (H1 2023: £21.5m)
– As expected, due to the timing of shipments into the Middle East and reduced volumes in Africa, given the impact of one-off launch volumes last year
– Strong performance forecast in H2
· OoH revenues -11.3% to £18.6m (H1 2023: £21.0m)
– Reflecting the planned reduction in activity having exited several unprofitable accounts, identified as part of the OoH Strategic Review.
· Group revenue declined by -1.8% to £84.0m (H1 2023: £85.5m)
· Gross margin increased by +2.9ppt to 44.0% (H1 2023: 41.1%)
– Absolute gross margin increased by £1.8m reflecting UK volume growth and pricing actions taken in FY23 to mitigate significant inflationary pressures over the last 18 months.
· Adjusted profit before tax growth of +18.0% to £14.5m and adjusted operating profit growth of +14.1% to £13.1m
– Improved gross margin together with a reduction in administrative costs as a result of implementing the OoH strategic plan.
· Exceptional costs of £2.7m
– £2.7m charge relating to investment in the Group’s new ERP system, which is progressing well.
– £0.2m charge relating to the implementation of the OoH review, that will conclude in H2.
– £0.2m credit relating to the recovery of costs relating to Group’s historical incentive scheme.
· Strong cash and cash equivalents at £70.3m (H1 2023: £56.1m, 31 December 2023: £67.0m)
– Increased net interest receipts of £1.4m (H1 2023: £0.8m)
· Interim dividend increased to 14.9p (H1 2023: 12.6p)
· Special dividend of 54.8p per share equating to an aggregate of £20m to be paid with the interim dividend
Outlook
The Company has begun trading in Q3 positively and in line with management expectations. Reflecting the progress made in H1 and underpinned by the Group’s ongoing focus on driving margin improvement, the Board now expects to report full year adjusted profit before tax slightly ahead of current market expectations.5
Notes
1 Excluding exceptional items
2 Free cash flow is the net increase in cash and cash equivalents before acquisition funding and dividends
3 Adjusted return on capital employed is the rolling 12 months’ adjusted operating profit divided by the average period-end capital employed
4 Nielsen IQ RMS data for the Squash, Flavoured Carbonates, RTD Stills, Flavoured Water, and Energy categories YTD to 15.06.24 for the GB Total Coverage market
5 FY24 expectations refers to Group compiled market consensus for FY24 adjusted PBT of £28.8m at 23 July 2024