Nichols, the soft drinks manufacturer that owns the Vimto brand, cancelled its final dividend yesterday after warning that the coronavirus outbreak, and the related restriction of movement of people worldwide, would have a “significant” impact on its financial performance in 2020.
The company said trading in the first two months of its fiscal year had been in line with management’s expectations. However, the recent disruption to the market meant it was unable to provide financial guidance for the year ended 31 December 2020.
The group stressed that it had entered its current financial year with a strong balance sheet, with more than £40m of cash and no debt. However, it added: “In light of the uncertain outlook, the Board considers it prudent to protect the group’s cash position in the near term and has taken the decision to cancel the final dividend announced on 26 February 2020 of 28.0 pence per share.”
Nichols stated that decision will conserve £10.4m of cash over the seasonally critical spring and summer period. “The Board will consider the group’s cash position once through this critical trading period and if it is appropriate will reinstate the payment of a dividend,” it said.
The company outlined that it was exploring various ways to mitigate the impact of reduced demand on the business for a potentially sustained period. It is taking steps to remove cost, including the re-evaluation of its marketing spend, postponing non-essential recruitment and suspending non-critical capital expenditure.
Non-Executive Chairman John Nichols commented: “With a heritage of 112 years, Nichols has successfully weathered significant challenges and changes across global markets before.
“Driven by the strength of the group’s brands, robust balance sheet and diversified business model, the board remains absolutely confident in Nichols’ ability to both manage the near term pressures impacting the global economy and emerge from this unprecedented period well-placed to continue to deliver the group’s long-term growth plans.”
