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Vimto maker Nichols has fallen to a loss as the damage caused to its out-of-home business by the pandemic continued to weigh heavily on the group.
Revenues for out-of-home recovered further in 2021, climbing 77.4% year on year, but the channel was still 31.4% behind pre-pandemic levels as Covid restrictions remained in place throughout the year.
As fixed costs from the division continued to weigh heavily on the overall financial performance of the soft drinks group, Nichols took a £39.5m one-off hit in writing down the value of the channel.
CEO Andrew Milne said: “Whilst recognising the hospitality trade has shown growth and is beginning to return to pre-Covid-19 levels, it is doing so at a pace slower than previously forecast and the margin progression after overheads anticipated previously is now not likely to be achieved without transformational change, in terms of how the group services the trade and its wider customer base.
“Therefore, a full strategic review into the group’s OoH route to market has commenced.”
The exceptional costs pushed Nichols into the red for the year, with an operating loss of £17.6m, compared with profits of £6.6m in 2020, and a pre-tax loss of £17.7m.
Elsewhere, group revenues increased 21.6% to £144.3m, broadly in line with pre-pandemic levels, as the Vimto brand went from strength to strength in the UK and overseas.
Vimto brand value grew 6.3% in the UK (13.2% since 2019), with the squash outperforming the dilutes market by 10.4%, while internationally revenues grew 21%.
Adjusted operating profits in the year were up 88.1% to £21.9m and EBITDA grew 44.1% to £23.7m.
Nichols said it expected continued revenue growth in 2022 and beyond, but highlighted that inflationary pressures was beginning to squeeze the business.
Milne added: “The value of the group’s diversification across both the UK and internationally has once again in 2021 proved to be pivotal to the success the business has achieved.
“The Vimto brand has been the driving force of growth both at home and abroad, and its unique flavour and taste continues to be loved by consumers around the globe.
“One of the key challenges during the year has been maintaining the availability of our products in our customers’ outlets. Globally, we have seen a number of shortages on key ingredients, logistical challenges and insufficient labour availability in certain markets.
“I am pleased we have shown extremely strong resilience to maintain excellent service levels and ensure our consumers can still enjoy our brands every day through our enhanced focus on operational excellence.”
Shares in the group increased 0.7% to 1,445p this morning.
Morning update
Racing fresh food inflation have driven up shop prices at the fastest pace in more than a decade, according to the latest industry data.
Shop price annual inflation hit 1.8% in February, up from 1.5% in the previous month, which marks the highest rate since November 2011, the British Retail Consortium reported.
Non-food inflation accelerated from 0.9% in January to 1.3% last month as health, beauty and furniture prices all spiked.
Meanwhile, food inflation overall stayed unchanged at 2.7% in February, the BRC-NielsenIQ shop price index showed.
But fresh food prices raced to 3.3% - compared with 2.9% in January - to the highest level since March 2013, pushed up by poor harvest in the UK and globally.
Ambient food inflation slowed in the month from 2.4% to 2%.
BRC chief executive Helen Dickinson said food inflation remained the key driver behind higher prices.
“Retailers continue to face cost pressures from higher shipping rates, with crude oil prices having almost doubled over the last year,” she added.
“Other pressures include labour shortages, commodity price increases, and rising energy prices. Retailers are going to great lengths to mitigate against these price rises and support their customers, for example, many supermarkets have expanded their value ranges for food. Unfortunately, there are limits to the costs that retailers can absorb.”
Mike Watkins, head of retail and business insight at NielsenIQ, said the underlying trend in shop prices would be upwards over the next few months.
Losses at Just Eat Takeaway have ballooned in 2021 but boss Jitse Groen said the group was “rapidly progressing” towards profitability.
Revenues at the delivery firm increased 33% to €5.3bn as it invested heavily throughout the pandemic, but losses shot up from €151m in 2020 to €1bn.
Just Eat said its adjusted EBITDA margin improved substantially in the fourth quarter, pushing the margin for the full year to -1.2% of gross transaction value.
Northern Europe is the most profitable region for the group, with adjusted EBITDA of €256m in 2021, with the UK and Ireland doubling orders in the past two years.
In North America, both in the US and Canada, various states, provinces and local governments imposed mandatory fee caps on online food delivery marketplaces. This had a significant impact of €192m on adjusted EBITDA. At the end of 2021, many of these had expired, but they remain in place in major US cities such as New York and San Francisco.
CEO Jitse Groen said: “After a period of significant investment, and with adjusted EBITDA losses having peaked in the first half of 2021, the company is now rapidly progressing towards profitability.
“While the Northern European segment, with an adjusted EBITDA of €256m in 2021, is the most profitable segment in the industry already, we also concluded the year with much improved adjusted EBITDA in our other operating segments.
“The team is working hard to make 2022 a successful year for both the company and all our stakeholders.”
Just Eat added it expected GTV to grow by mid-teens percentage points year on year in 2022, with 2021 being the peak year for losses.
Upmarket confectioner Hotel Chocolat has enjoyed a bumper first half and Christmas as it batted aside inflationary pressures with profits outpacing sales growth.
Revenues jumped 40% higher to £142.9m in the 26 weeks ended 26 December as it won over new customers in the UK and US.
In the UK, the group welcomed an additional 600,000 customers to increase its active base by 38% to 2.3 million, while in the US, digital-led growth pushed up numbers by 119%, with the Velvetiser in-home drinks system proving “a great hit”.
Hotel Chocolat’s joint venture in Japan also bore fruit, with sales soaring by 119% in the half.
As a result, underlying EBITDA increased 35% to £33.8m and pre-tax profits rose 56% to £24.1m.
CEO and co-founder Angus Thirlwell said he was “delighted” with the “great” set of results, which indicated the global strength of the Hotel Chocolat brand and the DTC business model.
“These results enable continued new job creation based in our British manufacturing operations, as well as roles in technology and multi-channel retailing,” he added.
“Our unparalleled pipeline of new product launches means I am confident we will be able to excite and retain their custom for many years ahead.”
The group said its trading had continued to be in line with board expectations in 2022, with the multi-channel performance in the UK remaining “encouraging” and the new overseas markets showing “promising potential for growth and profitability”.
“The last two years have been a period of very significant change both globally and within the business as we have evolved from a UK store-led brand to a globally ambitious digital-led brand with a broad-range of luxury cacao products,” Thirlwell added.
“The team has successfully managed to adapt to the continuously changing landscape and we have remained focused on our opportunities, delivering a sustained acceleration in growth over the last 18 months.
“A focus on bringing happiness through chocolate in every aspect of our business model will further strengthen and nurture the appeal of our brand, helping us achieve our goal of becoming the leading global direct-to-consumer premium chocolate brand.”
Devro, which makes collagen products for the food industry, boosted 2021 revenues by 5.5% to £252.4m thanks to price rises and volume growth.
Underlying operating profits rose 2.9% on 2020 to £42m, while pre-tax profits nudged up from £34m to £36.9m.
The group said it expected inflationary headwinds from energy and raw material costs in 2022, but added it mitigated the pressure with successful action on pricing.
CEO Rutger Helbing said: “We made significant strategic and financial progress in the year. Our improved performance was achieved despite ongoing challenging market conditions, including inflationary headwinds.
“We are also pleased with our free cashflow performance, which provides us with increasing optionality to invest in new products, to increase manufacturing capacity and to grow the dividend.
“The group has started the year well and, despite ongoing macro-economic headwinds including inflationary pressures and based on current exchange rates, we expect to make good progress in 2022.”
The FTSE 100 got its nose back in positive territory this morning, rising 0.6% to 7,375.21pts.
Shares in Just Eat Takeaway rose 1.6% to 2,929.3p this morning, while Hotel Chocolat opened 1.3% higher at 456p and Devro rose 2.9% to 210p.
HelloFresh also bounced back from heavy falls yesterday to climb 6.1% to €47.93 and Deliveroo is up 3.2% to 127.9p.
Coca-Cola HBC shares continued to freefall (see below) and opened down another 7.6% to 1,638p, while other early fallers included Virgin Wines UK, down 4.4% to 130p, and C&C Group, down 2.7% to 199.5p.
Yesterday in the City
The FTSE 100 slumped 1.6% yesterday to 7,337.29pts as markets across Europe continue to reel as the West waged an economical and financial war on Russia.
The listed food retailers took a hammering yesterday as discounters Aldi and Lidl were the only companies in growth in the latest Kantar grocery sales figures as inflation hit shoppers. Sainsbury’s plunged 3.5% to 266p, Tesco fell 2% to 284, Marks & Spence was down 2.9% to 169.7p and Ocado fell 3.1% to 1,330.5p.
McColl’s Retail Group also collapsed another 15% to a new low of 2p a share as the markets waited to see if the c-store chain can come up with the capital to keep trading.
Shares in HelloFresh sank 6.3% to €45.79 despite the 62% jump in full-year growth as a result of fourth quarter earnings coming in below expectations.
Eastern European drinks bottle Coca-Cola HBC continued to be hit by the conflict in Ukraine, falling a further 6.9% to 1,772.5p, taking the share price down 19% in the past five days.
Household goods maker McBride was one of the few risers yesterday, up 1.4% to 45.1p, alongside B&M European Value Retail, up 0.8% to 610p, and Nichols, up 1.6% to 1,442p.
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