Vimto producer Nichols has seen profits halve in the first half of its financial year, due to the impact of the coronavirus pandemic on out of home sales.
The company’s adjusted operating profits for the six months to 30 June amounted to £6.8m, a 48.9% drop on the previous year’s £13.3m. Without adjustments, the drop was even steeper, down 77% to £3m.
Sales meanwhile, slid 17.3% to £59.2m from £71.6m in the comparable six months a year ago.
However, Nichols decided to reinstate its 28p final dividend - which had been withdrawn in March - choosing to consider the two financial years 2019 and 2020 as a single review period given the overlap of the two years in terms of dividend payments. Last year, it paid out a 12.4p dividend.
John Nichols, non-executive chairman, said: “In light of the ongoing impact to the financial results of the group due to the global pandemic, the board remains pleased with the group’s performance. Although the immediate future remains uncertain, we are confident in Nichols’ ability to emerge from this period well-placed to continue to deliver the group’s long-term strategic plan.
“The strength of the Vimto brand, robust balance sheet and diversified business model has ensured a resilient cash performance in the period despite the unprecedented trading conditions across our markets. We have seen the Vimto brand significantly outperform the market in the UK, deliver good growth in Africa and perform robustly in the Middle East despite the challenges of the sweetened beverage tax (SBT) and Covid-19 restrictions.”
In the UK, revenues dropped 19.7% to £45.9m due to the closure of the out-og-home segment, but Vimto’s brand value rose 6.6% during the period, outperforming the market’s 1.3% growth.
Sales across Nichols’ international markets were £13.3m, a decrease of 8.1% versus the prior year.
Looking ahead, Nichols decided not to provide guidance for the second half as “uncertainty remains concerning the outlook for H2, particularly in terms of the degree to which the OoH sector will recover and the development of the pandemic in Africa”.
“Despite the short-term impact to the financial performance of the group as a result of the global pandemic, we remain confident in Nichols’ ability to emerge from this period well-placed to continue to deliver the group’s long-term strategic plans.”
Furthermore, Nichols announced that, after seven years, CEO Marnie Millard will resign on 31 December.
Current COO Andrew Milne will be appointed as CEO with effect from 1 January 2021 after having spent seven years with the company.
“On behalf of the board I would like to thank Marnie for her significant contribution to the group in the last seven years and wish Andrew every success in leading the business during the next phase of its development,” Nichols said.
Britvic has reported a 5.1% year on year sales drop after revenues in the third quarter were hit by the coronavirus pandemic.
Sales to 30 June amounted to £1.02bn, following a 16% decline in Q3 sales to £328.9m.
“Significant declines” in the out-of-home segment, due to the coronavirus crisis and lockdown, were “partly offset by strong growth” in at-home consumprion, Britvic said.
The business in March anticipated an adjusted EBIT impact of between £12m and £18m per month due to the virus’ restrictions. As they begin to be lifted, Britvic said it was too early to provide updated forecasts.
CEO Simon Litherland said: “As expected, Q3 demonstrates the full market impact of the Covid-19 lockdown. We have continued to focus on the clear priorities we set to navigate through the pandemic, which have helped us to manage our business effectively and to deliver a third-quarter performance in line with our expectations.
“I am pleased with both the market share gains and the performance across the channels open to us, however in the near term there remains a high degree of uncertainty about the pace and level of full recovery.
“Looking further ahead, I am confident that the strong momentum we built up going into the pandemic will return, and that our long-term strategy will continue to create value for all our stakeholders.”
The FTSE 100 started the day 0.1% lower at 6,261.06pts.
Risers included PZ Cussons, up 1.3% at 197p, Nichols, up 0.8% at 1,195p and Marks & Spencer, up 0.8% at 98.77p.
Fallers saw Hotel Chocolat open down 3.5% at 280p, C&C Group down 1.7% at 234.50p and FeverTree down 1.7% at 2,159.86p.
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