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Vimto maker flat on higher sugar prices

AN 18 per cent increase in sugar prices has depressed profits at JN Nichols, the soft drinks company based in Manchester, writes John Shepherd.

The pre-tax result for the first half of this year dipped from pounds 3.5m to pounds 3.4m.

The price of sugar, the prime raw material, was mainly pushed up as a consequence of sterling's devaluation.

Nichols, maker of the well-known Vimto drink made from raspberry, blackcurrant and grape jucies, has since managed to recoup the higher sugar costs through price increases.

Volume sales increased, helped by exports to Russia. Turnover rose to pounds 24.1m from pounds 23.6m.

John Nichols, managing director, said: 'We are satisfied with the performance of the brand during a difficult trading period when there is little evidence that the improved economic indicators are leading to any significant increase in consumer spending.

'Price increases are limited by the nature of the market. And there are many factors that will influence the final outcome for the year.'

Exports, though, are increasing and account for 10 per cent of volume sales. Cash flow remained positive, and the company's bank balance at the end of June topped pounds 9m. Capital expenditure this year is being doubled to pounds 4m.

First-half earnings per share eased from 14.8p to 14.4p, but still left plenty of scope to increase the interim dividend from 5.1p to 5.4p. The share price closed unchanged at 543p.