Nichols growth hit by UK soft drinks costs

The firm said it had delivered “excellent growth​” for the year but claimed that high levels of cost inflation had seen a negative impact on its UK margins.

“The year saw high levels of cost inflation in the UK soft drinks industry, affecting all our key raw materials​,” a Nichols statement revealed.

 “Whilst this had a negative impact on our UK gross margins, the effect on group operating margin has been mitigated by a combination of on-going productivity improvements in the UK and the strength of our international business. As a result, the group’s operating profit increased by 20% to £18.1m, maintaining the return on sales at 18%.”​

Low volume growth​

Nichols, which makes much-loved brands such as Levi Roots, Weight Watchers and Panda,  also said that the UK soft drinks market had suffered from relatively low volume growth last year.

This was a result of the economic downturn, which had a negative effect on consumer spending, according to the firm.

Despite these factors, Nichols’ UK soft drink divison outperformed the market by 8% for the year, reporting growth of 15%.

Group revenue for the year increased by 18% to £98.9M for the year, compared with £83.9M last year. Profit before tax was also up 20% for the period to £18.1M.

Internationally, the firm posted a strong performance for the year, with sales rising by 31% to £21.1M.

Core markets​

This growth was driven by Vimto further increasing its market share in the core markets of the Middle East, Africa and Northern Europe, according to the firm.

John Nichols, non-executive chairman, described the firm’s performance as “outstanding​” and cited the firm’s growing international presence as a key factor.

He said: “2011 was another record year with an outstanding performance in the face of the most challenging UK retail environment seen in a decade. Our strong portfolio of brands and our growing international presence have helped drive significant growth in sales, profitability and cash generation.​

“While 2012 will remain challenging we are confident of delivering profitable growth in the current year and beyond​.”