Nichols PLC Trading update (7418X)
December 23 2019 - 1:00AM
UK Regulatory
TIDMNICL
RNS Number : 7418X
Nichols PLC
23 December 2019
Date: Embargoed until 0700 Monday 23 December 2019
Contacts: Marnie Millard, Group Chief Executive Officer
Tim Croston, Group Chief Financial Officer
Andrew Milne, Group Chief Operating Officer
Nichols plc
Telephone: 01925 222 222
Website: www.nicholsplc.co.uk
Alex Brennan/ Hattie Richard Lindley/ Rachel Hayes
Dreyfus
Hudson Sandler N+1 Singer (Nominated Adviser
and Broker)
Telephone: 020 7796 Telephone: 0207 496 3000
4133
Email: nichols@hudsonsandler.com Website: www.n1singer.com
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
Nichols plc
(the "company" or "Group")
Trading update
Trading update for the year ending 31 December 2019
Group sales in 2019 are expected to be c.4.0% ahead of the prior
year. We are pleased with this performance given the slowdown in
the UK soft drinks market and the challenging broader consumer
environment.
Across the Group, sales in both the UK and International
businesses are ahead of 2018. In the UK, the Vimto brand continues
to deliver growth against strong prior year comparatives and
increase market share. Within our international markets, Ramadan
2019 has been one of the brand's most successful campaigns across
the Middle East region.
We currently anticipate full year Profit Before Tax to be in
line with market expectations.
Guidance for the year ending 31 December 2020
The Saudi Arabian and UAE tax authorities have recently
implemented an excise tax of 50%, to be levied on the retail price
of non-carbonated sweetened drinks.
This tax will be applied to all non-carbonated drinks containing
either natural or artificial sweeteners, including sales of Vimto
products. Therefore, unlike the UK soft drinks levy, product
reformulation is not an option. Whilst it is difficult to estimate
the future effect on sales volumes of the Vimto brand in these
regions, at this point in time, we have to assume the increased
retail price will have a negative impact from 2020. In order to
mitigate the impact, we are currently developing plans in
collaboration with our long term in-market partner which will
require increased investment in the Vimto brand to maintain its
strong market position.
The actual impact on sales in the Middle East will not be known
until after the Ramadan trading period, which accounts for
approximately 80% of annual in-country revenues, and we will update
the market accordingly in our 2020 Interim Results Announcement in
July. Whilst there is a broad range of possible outcomes, we
believe the impact of the tax could be material to the Group and
may result in Profit Before Tax for FY20 being materially below
current expectations.
The company's annual sales of concentrate to the Saudi and UAE
markets is c.GBP7.0m and the Middle East as a whole, remains a key
strategic market for the Vimto brand. In addition, the Group
remains highly profitable and cash generative, allowing continued
investment in our future growth plans.
Nichols plc will issue a further trading update on Thursday 9
January 2020.
Notes to Editors:
Nichols plc is an international soft drinks business with sales
in over 85 countries, selling products in both the Still and
Carbonate categories. The Group is home to the iconic Vimto brand
which is popular in the UK and around the world, particularly in
the Middle East and Africa. Other brands in its portfolio include
Feel Good, Starslush, ICEE, Levi Roots and Sunkist.
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END
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