Strong sales of Vimto have driven Nichols’ profit and dividend growth into double-digit figures, as the company announced that CEO Brendan Hynes is to step down.

The preliminary results for the year to 31 December 2012, released on Thursday, showed good performance on Nichols’ overall group sales, up 9% to £107.8m. Profits before tax also rose 13% to £20.5m, which the company admitted was ahead of expectations, while earnings per share rose to 41.1p, up 14%.

UK sales of the drinks group grew “significantly” ahead of the market, the company said, rising 9% to £85m. This was driven by increasing penetration of the core Vimto brand, which has seen heavy marketing investments, as well as new products including the Levi Roots and Weight Watchers ranges. UK sales compared favourably to the overall UK soft drinks market, which returned growth of only 3% (including the on-trade) in value terms, on volumes that fell 1% (Nielsen 52 w/e 5 Jan 2013).

Chief executive Brendan Hynes said success had been in spite of significant raw-material costs inflation hitting gross margins in the UK and the high levels of competitors’ promotion, both of which contributed to an extremely competitive UK market. However the company said it would continue to invest in brands and NPD.  

Other brands in the portfolio include Sunkist & Panda. 

Increasing penetration of Vimto was also seen outside the UK, with key markets in Europe and Africa enjoying a rise in market share – up 22% in Africa, despite very strong sales comparatives from last year. Although sales to the Middle East were reported as flat, total export sales rose 8% to £22.7m. This “substantial overseas trade” helped the company pick up a Queen’s Award for international trade during 2012.

Panmure analyst Damian McNeela said Nichols’ performance had delivered ahead of expectations. Panmure increased its forecasts by 3%, saying that Nichols should be on track to deliver 5% revenue growth to £113m. However, Panmure argued that although Nichols shares had risen 4% the year to date, this was underperforming slightly compared to the wider UK market.

Nichols also announced that CEO Brendan Hynes will step down at the AGM on 1 May, with Marnie Millard, current MD of its UK soft drinks business, set to take the helm.

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