(Alliance News) - Vimto cordial producer Nichols PLC said Thursday it is "pleased" with the revenue growth and sales performance seen in 2019, but reiterated that profit in 2020 will be below expectations.
In a trading update for the year ended December 31, the soft drinks producer said its revenue increased 3.6% to GBP147.2 million. Revenue in 2018 was GBP142.0 million.
Nichols said UK sales totalled GBP117.7 million, 2.7% ahead of GBP114.6 million last year.
Within the UK, Vimto brand sales grew by 0.8%, in line with the overall soft drinks market, Nichols said. The company noted that the prior year, where Vimto brand sales in the UK grew by 13%, was a "very strong" comparative.
Revenue in international markets grew by 7.5% year-on-year to GBP29.5 million and sales to the Middle East were GBP11.6 million, a 21% rise from last year.
The company said it is "pleased" with its sales performance and expects full-year profit before tax to be in line with market expectations.
However, the company reiterated its difficult outlook for 2020.
Back in December, the company had said pretax profit for 2020 is expected to be "materially below" current expectations, as a result of a 50% excise tax on non-carbonated sweetened drinks recently implemented in Saudi Arabia and United Arab Emirates.
"This tax will be applied to all non-carbonated drinks containing either natural or artificial sweeteners, including sales of Vimto products," the company had noted.
Therefore, unlike with the UK soft drink levy, product reformulation is not an option, Nichols had said.
Back in December the company had said its annual sales of concentrate to the Saudi and UAE markets is approximately GBP7.0 million, and the Middle East as a whole remains a key strategic market for the Vimto brand.
"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," the company had said.
Chair John Nichols said: "Underpinned by the group's diversified business model, strong brands and successful track record, the board remains confident of Nichols long-term progress."
Nichols shares were up 0.9% in London at 1,425.00 pence each on Thursday morning.
By Loreta Juodagalvyte; loretajuodagalvyte@alliancenews.com
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Nichols plc (NICL)