Nichols 2025 results: profit up, margins fatter, dividend rising
Nicely executed. Nichols PLC has posted a tidy set of preliminary results for 2025, with profit growing faster than revenue thanks to disciplined cost control and a smarter international mix. The asset-light model continues to do the heavy lifting, and the Board is signalling greater cash returns ahead.
Headline numbers investors should know
| Metric | 2025 | 2024 | Change |
|---|---|---|---|
| Group revenue | £175.1m | £172.8m | +1.3% |
| Adjusted operating profit (excludes exceptional items) | £31.7m | £28.9m | +9.9% |
| Operating profit | £27.3m | £21.5m | +27.1% |
| Adjusted PBT | £33.6m | £31.4m | +7.0% |
| PBT | £29.2m | £24.0m | +21.5% |
| Adjusted PBT margin | 19.2% | 18.2% | +1.0ppts |
| Gross margin | 46.1% | 45.7% | +0.4ppts |
| Adjusted EPS | 67.53p | 64.02p | +5.5% |
| EPS | 58.67p | 48.84p | +20.1% |
| Cash and cash equivalents | £55.7m | £53.7m | +3.8% |
| Free cash flow | £13.8m | £17.8m | -£4.0m |
| Total ordinary dividend | 33.7p | 32.0p | +5.3% |
| Proposed final dividend | 18.7p | 17.1p | +9.4% |
Definitions in brief: “Adjusted” excludes exceptional items (mainly ERP project costs). EBITDA is earnings before interest, tax, depreciation and amortisation. ppts means percentage points.
What drove the beat: mix, margins and focus
Revenue edged up 1.3%, but profits grew much faster. That tells you margins did the work. Gross margin rose to 46.1% thanks to tight cost management and the step-up in higher-margin concentrate sales in Africa after moving production closer to the consumer. Administrative expenses (ex-exceptionals) fell by £1.1m to £38.7m.
The new enterprise resource planning (ERP) system launched in Q1 is already credited with efficiencies. Exceptional costs for the change programme were £4.4m in 2025, and the Group does not expect further exceptional charges from this programme in 2026.
Segment performance: UK Packaged shines; International optimises
- Packaged revenue: £135.2m (2024: £132.8m). UK Packaged grew 3.1% to £92.0m, supported by innovation and distribution gains. Vimto hit a record Retail Sales Value (RSV) of £129.1m.
- International Packaged: broadly flat revenue, but a healthier margin mix. Africa like-for-like sales rose 9.4% after shifting to local concentrate. Middle East revenue fell 15.5% due to Ramadan-related phasing of shipments.
- Out of Home (OoH): £39.9m (2024: £40.0m). Flat revenue despite deliberately exiting the low-margin Starslush brand. Adjusted operating profit held at £7.0m, reflecting a simplified, profitability-first model focused on post-mix and ICEE.
Adjusted operating profit in Packaged rose to £43.9m (2024: £40.6m), underlining the quality of earnings improvement.
Innovation and brand building underpin UK momentum
- New products included Vimto Wonderfuel in squash and Vimto Energy in wholesale and kids’ formats; energy RSVs continued to build, with Vimto Energy hitting £4.0m RSV in 2025.
- A record £3.5m masterbrand campaign – “Love the Taste or Your Money Back” – ran across 36 million packs, boosting penetration and equity.
- Licensing kept expanding through Myprotein and a new deal with Applied Nutrition, pushing Vimto into functional categories like energy gels and hydration tablets.
Cash, dividends and capital allocation
Free cash flow dipped to £13.8m from £17.8m due to a working capital timing difference linked to year-end sales. Management expects this to unwind in H1 2026. Operating cash generation stayed healthy at £21.0m, and cash and deposits ended the year at £55.7m with no bank borrowings.
The Board proposes a final dividend of 18.7p, taking the total ordinary payout to 33.7p. Importantly, Nichols intends to reduce dividend cover to 1.5x adjusted earnings during 2026. Dividend cover is the ratio of earnings to dividends – a lower number means a higher payout ratio. In plain English: expect more cash back if trading stays on track.
Why this matters: quality over quantity
Top-line growth of 1.3% is modest, but the levers Nichols controls – mix, pricing, and costs – are moving the right way, lifting adjusted PBT margin to 19.2% and return on capital employed to 34.1%. This is a business compounding profitability without piling on assets, and the asset-light international strategy is doing exactly what it should: raising margins and resilience.
What could wobble
- International revenue is sensitive to shipment phasing in the Middle East, as shown by the 15.5% decline there in 2025.
- Free cash flow fell year-on-year, albeit due to timing that management expects to reverse in H1 2026.
- Finance income slipped to £2.1m from £2.7m on lower deposits and rates, and the effective tax rate ticked up to 26.5%.
ESG and operations: small changes, real impact
- Packaging lightweighting removed 750 tonnes of plastic and aluminium in 2025 (versus a 2022 baseline).
- Local production in West Africa reduces shipping emissions and supports jobs.
- EcoVadis rating improved from bronze to silver, now in the top 15% of companies assessed.
Outlook: steady start to 2026 and more to come
Trading so far in 2026 is in line with expectations. The business remains well positioned by a diversified route-to-market mix, a strong balance sheet, and an innovation pipeline across UK and international Packaged. The Board’s plan to move dividend cover to 1.5x signals confidence in sustained cash generation.
My take: a disciplined performer getting better
This is a solid, execution-led year. Profit growth outpaced revenue, gross margin advanced, and Packaged profitability stepped up – all while simplifying OoH and absorbing ERP disruption. The cash position is robust, and the prospective increase in payout in 2026 is a clear positive for income-focused holders.
On the watchlist: continued delivery of like-for-like growth in Africa as the concentrate model scales, normalisation of working capital in H1 2026, and Middle East shipment timing around Ramadan. Net-net, Nichols looks to be doing the right things – prioritising profitable growth, protecting margins, and sharing more of the spoils with shareholders.
