Nichols

After a thorough shake-up over the last two years drinks group Nichols made it back into the red in 2005 and is confident of further growth across the board. January ’05 acquisition Panda Soft Drinks added £8.3 million of revenues in the 11 months of new ownership. With a re-launch as a ‘healthier product with a new image’, executive chairman John Nichols predicts sales there this year ‘in excess of £10 million, with TV advertising for the first time’.

Considering the successful reinvigoration Nichols made of Vimto, with sales at effervescing to record levels and up 6% in the UK this year, it would seem a similar result could be achieved at Panda. ‘This year we’ll see a continuation of the organic growth at Vimto and we’re very hopeful we’ll see considerable growth in Panda too,’ asserts Nichols.

For calendar ’05 the group saw pre-tax profits fizz up 13% to £7.2m on sales from continuing operations up 29% to £51.5m. Overseas growth contributed, especially in the Middle East, where Vimto is ‘very much a Ramadan product’. A second acquisition, in May, of Brighton-based Beacon Soft Drinks, reinforced the draught drinks division in the South, helping divisional sales up 14%. Draught soft drinks are those dispensed from taps in bars and the portfolio includes Sunkist, Pepsi and Ocean Spray.

Since the year-end two disposals, of hot-drinks dispenser Balmoral and a freehold property, have raked in £12.6m of cash. No acquisitions are in the pipeline, admits Nichols, but ‘we’re looking at drinks brands out there’.

Consensus forecasts point to £8.17m of pre-tax profits next year trickling through to 16.14p earnings. The resultant multiple is well below the 18.35 beverage average. We last mentioned Nichols as a speculative punt in late ’04 at 158.5p and it’s still worth adding.

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