(Corrects headline and para 1 to say growth was driven by focus
on high-margin products and cost cuts, not fewer promotions.
Corrects para 8 to say international sales were hurt by change
in delivery timing of Vimto concentrate, not the timing of
By Aastha Agnihotri
July 24 Soft drink maker Nichols Plc
posted an 11 percent rise in first-half pretax profit, helped by
a focus on high-margin products and cost cuts.
Nichols, which has been reducing its exposure to the heavily
promoted carbonates sector to improve profitability, said
adjusted pretax profit rose to 10 million pounds ($17 million)
in the six months to June 30 from 9 million pounds a year
Revenue rose 3 percent to 56.6 million pounds.
"The carbonates category continues to be very competitive as
demonstrated by the frequent price promotions by Coke and Pepsi
and therefore puts pressure on margins," Finance Director Tim
Croston told Reuters.
The Coca-Cola Co and rival PepsiCo Inc have
been struggling with declining soda sales in developed markets
as consumers become more health conscious.
"The soft drink industry is notorious for very heavy
promotions and discounts ... to some degree Nichols stepped back
from some of the deep discounting and promotions," analyst
Nicola Mallard of Investec Securities said.
Mallard rates the stock at "buy" with a 1070 pence target.
International sales, which account for about 21 percent of
total sales, fell 12 percent due to a change in the timing of
shipments of its Vimto concentrate to the Middle East ahead of
Nichols' fruit and herb-based drink Vimto has about 80
percent of Middle East sales coming in just three months - the
month of Ramadan and the two months prior to the festival.
Nichols, whose bigger rivals in the UK include Britvic Plc
and Irn-Bru maker A.G. Barr Plc, said the
positive trend seen in the UK in the first half is expected to
continue through the second half.
Nichols raised its interim dividend to 7.1 pence per share
from 6.32 pence last year.
Shares in the company were up 2.6 percent at 960 pence at
1024 GMT on the London Stock Exchange.
($1 = 0.5873 British pounds)
(Editing by Gopakumar Warrier)