Nichols – yesterday’s AGM Trading Update for this drinks group is a spur for its shares, setting a Target Price almost 17% higher

24.04.2025

There are thousands of investors who find it hard to pay more than pennies for shares, with so many having cut-off points at 100p.

So, if you are one of those individuals – then read no further!

Today I am recalling my thoughts about a company called Nichols (LON:NICL) following reading its AGM Trading Update that was issued yesterday, with its shares now 1200p.

If you are still reading then it is a fair guess that you already associate the name of Nichols with its principal product, the unique and still very popular Vimto brand.

The Business

Established in 1908, Nichols operates within the resilient soft drinks category and owns or licenses several brands.

The £440m-capitalised group is geographically and operationally diversified, operating across three routes to market of UK Packaged, International Packaged and Out of Home.

In the UK, Nichols operates across five soft drinks sub-categories: squash, flavoured carbonates, fruit drinks, energy and flavoured water.

Nichols' portfolio includes the iconic Vimto brand plus a growing portfolio of licensed brands including Levi Roots, ICEE, SLUSH PUPPiE and Sunkist.

Under its asset-light model, Vimto is prominent in areas such as the Middle East and Africa and is enjoyed in over 60 countries worldwide. 

Yesterday’s AGM Trading Update

The first three months to end-March saw group revenue up 1.2% to £39.3m (£38.8m).

UK Packaged revenues increased by 4.0% to £21.3m (2024: £20.4m) driven by continued distribution gains and underlying volume increases for the Vimto brand.

International Packaged revenue reduced by 7.6% to £9.0m (2024: £9.8m) which was affected by deliveries to the Middle East and the timing of Ramadan.

The Board remains confident of making continued strategic progress and delivering further profitable growth in the International business for the full year.

As far as the group’s Outlook is concerned, the Management stated that the business was underpinned by the strength of the Vimto brand, its diversified business model, and clear growth strategy.

The group is well-positioned to deliver continued profitable growth and make further progress towards its medium-term financial and strategic ambitions.

Management Comment

CEO Andrew Milne stated that:

"We are pleased to have delivered further strategic progress in Q1.

Our UK Packaged business delivered continued growth as a result of increased volumes and distribution gains, reflecting progress against the strategic priorities outlined at our 2024 CMD.

In the International business, we are making good progress with the shift towards a higher margin concentrate model in several of our West African markets.

Whilst the move away from shipping finished product impacts revenue, the concentrate model delivers a step change in margins and positions us well to achieve long-term, profitable growth in these markets.

We continue to expect further growth in FY25 in line with market expectations as we continue to execute our strategy and make progress towards our medium-term financial and strategic ambitions."

The Equity

There are some 36.97m shares in issue.

Larger holders include Investec Wealth & Investment (4.09%), Invesco Asset Management (2.56%), Rathbones Investment Management (2.15%), Evelyn Partners Investment Management (1.71%), Link Fund Solutions (1.44%), Gresham House Asset Management (1.44%), JM Finn (0.80%), Brooks Macdonald Asset Management (0.52%), Sanford DeLand Asset Management (0.49%) and Sorbus Partners (0.41%).

Broker’s View

The drinks supplier is ‘sippin’ pretty’ after a strong start to 2025, according to Berenberg analyst Matthew Abraham, who reiterated his Buy recommendation and Target Price of 1760p on its shares.

He stated that the stock was on track to deliver full-year revenue and profit in line with market expectations, noting that the first-quarter update reported revenue growth of 1.2% year-on-year. 

“Nichols’ equity story continues to progress positively, with the ‘UK packaged’ segment taking further market share, ‘out of home’ returning to growth and the continuation of the supply model transition in West Africa.

Nichols is well-positioned against tariff uncertainty, in our view, given its dominant position in a defensive market, with significant cost cover and low single-digit direct US sales exposure.”

Another analyst who thinks that the group’s shares are a Buy, is Sahill Shan at Singer Capital Markets.

Shan, who reckons that the group is both undervalued and cash-rich, has a 1485p Target Price on the shares.

His estimates for the current year to end-December 2025 are for revenues of £178.5m (£172.8m), with adjusted pre-tax profits of £33.0m (£31.4m), lifting earnings to 67.6p (64.0p) and its dividend to 33.85p per share.

For next year, he looks for £185.3m sales, £35.1m profits, 72.0p earnings and a 36.0p dividend.

Already, he has assessments for 2027 for £192.5m revenues, £37.4m profits, 76.8p earnings and a 38.41p dividend.

My View

Probably reflecting certain times of the £440m group’s accounting year, it is well worth noting that its cash coffers were over 10% higher at £60.0m at end-March, compared against £53.7m at the December year end.

This is a truly international business whose shares are undervalued when considering its history, its spread, its cash generation and its robust balance sheet.

In initiating my views on this group,

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