Vimto maker Nichols has forecast bumper annual profits after reporting a 9% increase in sales for 2012.

In a trading statement, Nichols, which also makes Levi Roots soft drinks and Sunkist, said sales for the year ending 31 December were £108m.

It said the business in the UK grew by 10%, outperforming the market, which expanded 3.2%, according to Nielsen figures.

The company said it expected to at least maintain its operating margins despite another year of high promotional activity and significant cost inflation.

It predicted that group profit would be significantly ahead of last year and higher than market expectations.

“Nichols has confirmed another strong year,” said Panmure analyst Damian McNeela.

“Despite a challenging trading environment, the company managed to maintain margins at about 18.3% which should result in an adjusted PBT of around £20m in line with our expectations.”