SOFT drinks firm Nichols predicted a significant increase in annual profits today as sales continue to beat targets.
In a trading statement up to the end of December the Newton-le-Willows firm, which makes the iconic Vimto soft drink brand, said it has maintained the “excellent momentum” reported at the half year, with sales increasing by 18% compared with the same period in 2010.
This was ahead of the group’s own expectations and it said it has been achieved against strong comparatives in the prior year of 16% compared with 2009, and despite the continued downturn in the UK economy.
Again, Nichols’ brands have outperformed the UK soft drinks market, while its international business continues to deliver “significant year-on-year growth”.
And despite raw material costs and inflation, as well as investment in promotional activity during 2011, the group said its operating profit margin will still be maintained “as a result of ongoing productivity improvements and tight control of costs”.
It added: “The group’s balance sheet remains strong, with underlying cash generation also ahead of expectations.
“In summary, we expect group profit to be significantly ahead of last year and ahead of current market expectations for the year ended December 31, 2011.”
It also revealed that it will launch a new range of Weight Watchers branded low calorie soft drinks into the UK and Republic of Ireland this month.
Liverpool stockbroker Panmure Gordon, which listed Nichols as one of its top 17 tips for 2012, welcomed today’s trading update.
Analysts Damian McNeela and Graham Jones said: “Nichols’ pre-close statement indicates that the company has delivered another year of strong growth, with revenues rising 18% to circa £99m.
“Encouragingly, this growth was driven by both its UK and international businesses and provides us with the confidence to increase our profit before tax forecasts by 6% to £19.2m for 2012.
“Nichols is our one of our top picks for 2012, and we reiterate our ‘buy’ recommendation and 640p price target.”
