Merseyside-based Vimto maker Nichols saw a big improvement in sales and margins in 2021 but a £36.2m write-down of the value of its businesses turned profit into loss. Tony McDonough reports
Vimto maker Nichols is continuing to make a strong recovery from the pandemic but a write-down in the value of its business has wiped out profits for 2021.
In the 12 months to December 31, 2021, Newton-le-Willows-based Nichols saw sales rise 21.6% to £144.3m. Pre-tax profits based on trading came in at £21.8m – an 87.9% improvement on the £11.6m achieved in 2020 at the height of COVID-19.
However, in January the stock market-quoted business issued a trading update ahead of Wednesday’s preliminary results saying it remained concerned about the performance of its ‘out of home’ (OOH) market.OOH refers to sales of its products in hospitality outlets such as cafes, bars and hotels.
This has been badly impacted by pandemic lockdown and restrictions. Consequently, Nichols has now announced an exceptional charge of £39.5m, adding that £36.2m of the total is attributable to a non-cash impairment of OoH goodwill. When added to the bottom line this turns the profit into a pre-tax loss of £17.7m.
Out of home did show signs of a strong recovery in 2021 with revenues up 77.4% against 2020, but still 31% behind 2019, the last full year before 2019. OoH continues to recover from the pandemic with revenues up 77.4% and volumes also up.
Nichols sells Vimto and other soft drinks brands, including Feel Good, Starslush, ICEE, Levi Roots and Sunkist, across the UK and to 85 countries across the world. Vimto is particularly popular in the Muslim world during the holy month of Ramadan. Vimto provides a quick boost of sugar-filled energy following the dawn ’til dusk fast.
Vimto brand value is up 13.2% since 2019 versus the rise in the value of the wider soft drinks market of 11%, according to brand value specialist Nielsen. The Vimto brand continues to progress internationally, with revenues up 21%. Middle East revenues are down by 2% but the company is investing in marketing in the region.
Nicholas chairman John Nichols said: “The continued strengthening of the Vimto brand, both in the UK and internationally, combined with the benefits of our diversified business model, has ensured another resilient financial performance in the period.
“We have achieved significant outperformance of the Vimto brand in dilutes in the UK, and we delivered solid growth internationally, particularly in Africa where we continue to grow, and critically delivered a robust performance in the Middle East.
“The pandemic has continued to present significant challenges for us all throughout 2021. Our first and most important objective continued to be the protection and wellbeing of our employees and customers.
“Throughout these difficult times, I have been delighted to witness how our colleagues have pulled together and consistently demonstrated their values and commitment to our business. The group enters 2022 with excellent momentum and in a strong financial position.”