Shares in Nichols (NICL:AIM) bubbled up 5% to 952p after the soft drinks producer delivered a 21.5% uplift in FY25 pre-tax profits to £29.2 million.
That was in line with consensus on 1.3% sales growth to £175.1 million, reflecting both volume and value increases.
Investors also toasted a step-up in dividends from the company behind Vimto, the iconic brand which achieved its highest-ever UK Retail Sales Value of £129.1 million.
Nichols increased its final dividend by 9% to 18.7p, resulting in a total dividend hike from 32p to 33.7p. Furthermore, the diversified soft drinks group announced a change to its dividend policy.
It now plans to reduce dividend cover from 2 times to 1.5 times. This supports a more progressive ordinary payout and reflects management’s confidence in the outlook for the Newton-le-Willows-based business. Nichols closed 2025 with net cash of £55.7 million in the coffers.
‘While the dividend has stepped up, management remains committed to pursuing future M&A, which offers scope to future earnings upside,’ stressed Berenberg.
Vim and vigour
Sustained growth in the UK Packaged division was driven by new product innovation and market share gains across the dilutes, energy and ready to drink sub-categories.
International Packaged division continued to deliver ‘excellent results’, according to management. These were underpinned by a new concentrate model in West Africa that is improving margins.
Another highlight was continued growth in the group’s Vimto brand licensing partnerships with Myprotein and Applied Nutrition (APN).
Minimal Iran exposure
Reassuringly, Nichols’ Middle East division continues to trade normally with limited effect from the Iran conflict.
Keep in mind, Iran makes up just 3% of the division’s revenue. Saudi Arbia is the group’s main Middle Eastern market and remains largely unaffected by the war.
‘As a result of the continued execution of our growth strategy, Nichols delivered another strong performance in 2025, delivering solid profit growth,’ commented CEO Andrew Milne.
‘In the UK, Vimto has grown across its four key sub-categories, reinforcing the enduring strength and appeal of our iconic brand.’ During the year, Nichols continued to drive growth in its ready-to-drink and energy ranges while expanding the core Vimto squash range.
Strength and heritage
The company is seeing increased competition in squash. For instance, Princes (PRN) has launched a squash range developed in partnership with confectionery brand Swizzels. However, Milne assured Sharesify that Nichols is well-equipped to fend off rivals in this category.
‘You’ve got three brands (in squash) that have been there a very long time – so Vimto, Ribena, Robinsons,’ explained Milne.
‘Also, there’s a big private label element in squash. Yes, there are different competitors that have come in. Swizzels has launched a squash. But I feel that with the strength and heritage we have, we are well-placed to deal with that.’
Nichols is a high-quality soft drinks firm generating defensive growth, robust margins and high levels of free cash flow. We view it as a compelling long-term option given its strong presence in the world’s fastest-growing soft drinks markets.
Nichols’ net cash pile also provides plenty of dry powder for earnings expansion through acquisitions.
Disclaimer: The author James Crux has a personal interest in Nichols.
Read the press release here: https://www.nicholsplc.co.uk/investors/
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