Vimto range

Vimto made further market shares gains in the first half

The boss of Nichols has hailed the drinks group’s first-half performance in the face of challenging inflationary headwinds, with Vimto making further market share gains and the out-of-home channel moving back above pre-Covid levels for the first time.

Revenues in the six months to the end of June increased 19.1% to £80.2m, with UK sales up 29.3% to £62.6m but international down 7.2% to £17.6m as a result of shipping disruptions.

The Vimto brand continued to outperform the rest of the dilutes markets, with value up 5.7%, while the out-of-home operation rose 131.9% year-on-year as the market in pubs, clubs, theme parks, trampoline parks and cinemas continued to recover following the end of Covid restrictions.

Pre-tax profits in the half jumped 17% to £10.1m, with EBITDA up 10.6% to £12.4m, leading the business to lift its interim dividend by 26.5% to 12.4p.

CEO Andrew Milne told The Grocer today he was “really encouraged” by the results given the challenging inflationary environment pushing up the cost of energy, packaging, ingredients and wages.

“We are in a strong position going forward thanks to our diversified business model, which is spread across out-of-home, UK retail and international, with a strong portfolio of brands and a healthy balance sheet,” he said.

Nichols didn’t disclose the exact nature of any prices rises passed to supermarkets and other customers, but Milne added cost price increases had been put through “where appropriate”.

“The group is experiencing significant ingredient and packaging inflation and, whilst ongoing mitigation actions have provided relief in the first half of the year, inflationary pressures continue to accelerate,” Milne said in the results statement posted on the London Stock Exchange.

“The group continues to work with its customers and suppliers across the whole of the supply chain to identify the optimal balance of mitigation actions and price recovery.”

Measures to manage costs have included makes changes to the UK supply chain, with a new contract manufacturer sourced for its squash products to provide additional capacity and to take advantage of higher speed line and more efficient bottling processes.

However, the move did lead to exceptional costs of £1.2m being incurred during the first half.

Non-executive chairman John Nichols said: “We have a long-term track record of growth, a proven, diversified strategy, and a quality range of brands. All of this is underpinned by a strong balance sheet. As a result, the board remains confident that the group is well positioned to deliver its long-term growth plans.”

Shares in Nichols have fallen 4.6% to 1,285p today.