Merseyside-based Vimto maker Nichols says the COVID-19 pandemic will see profits plummet in 2020 and is consulting with staff on job cuts. Tony McDonough reports
Vimto maker Nichols is looking to make redundancies following a dip in sales during the COVID-19 pandemic with full-year profits set to plummet.
The Mersyside-based softs drinks maker, which sells it products all over the world, says that in the nine months to September 30 revenues fell 16.5% to £91.7m compared to the same period in 2019.
Vimto continued to sell well in retail outlets both in the UK and overseas, Nichols said in an update to the stock exchange on Thursday. However, its suffered “significant declines” in so-called out of home sales, which are sales in hospitality outlets such as cafes, bars and hotels, many of which have been shut for long periods due to COVID restrictions.
Third quarter revenues in the out of home market were 45.2% lower than those seen in the same period of 2019. Even when outlets were open, social distancing measures meant there was significantly reduced footfall.
The Vimto brand has continued to outperform the wider UK soft drinks market, achieving growth of 5.8% in value terms in the year to date, versus 1.9% value growth across the wider market.
Across the group’s International markets, the strong momentum reported in its half-year results has continued, particularly in Africa, where revenues increased by 10.5% against the prior year.
Nichols said it had carried out a review of its operational structures has announced to its employees on November 18 proposals subject to consultation that, if implemented fully, would make a number of roles redundant by the first quarter of 2021. The company did not say how many roles would be affected.
The Newton-le-Willows-based company expects pre-tax profits for the full year to be in the range of £11m and £13m, well down on the £32.4m achieved in 2019. Despite the financial challenges posed by the ongoing pandemic cash and cash equivalents at the end of the period were £45.4m (September 30, 2019: £37.2m).
Chairman John Nichols said: “The board remains pleased with the group’s resilient performance in the period despite the significant impact of the COVID-19 pandemic on the out of home sector. We are particularly encouraged by the strong performance of the Vimto brand in the UK where we continue to make market share gains.
“The group has taken the difficult decision to propose, subject to consultation, that a number of roles are removed from our structure. These difficult decisions have not been taken lightly and I thank all Nichols colleagues for their continued hard work and commitment.
“While recognising the current and near-term impact of the pandemic on the soft drinks market, the board continues to believe that Nichols, underpinned by the strength of the Vimto brand and the group’s diversified business model, remains well placed to deliver its long-term strategic ambitions.”