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Nichols slips as it warns of ‘significant impact’ on 2020 results from coronavirus, scraps dividend

Last updated: 09:02 31 Mar 2020 BST, First published: 08:15 31 Mar 2020 BST

Nichols PLC - Nichols warns of ‘significant impact’ on 2020 results from coronavirus, scraps dividend

Nichols PLC (LON:NICL) has warned of a “significant impact” on its 2020 performance as a result of movement restrictions imposed during the coronavirus pandemic.

The maker of Vimto said while trading in the first two months of its current year was “in line” with expectations, it was “not currently able” to provide financial guidance for the entire year due to the level of uncertainty.

Nichols also said it has cancelled its final dividend of 28p per share to preserve £10.4mln of cash over the “critical spring and summer period”, adding that it will also be re-evaluating its marketing spend and postponing recruitment and non-critical expenditure.

“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", said non-executive chairman John Nichols.

In a note on Tuesday, analysts at Liberum maintained their ‘hold’ rating and 1,795p target price on the company, saying cancelling the dividend “now seems like a reasonable action to take and there is reason to be hopeful that the dividend will be reinstated due to the lean operating model, strong balance sheet and diversified business model, once it is through the peak demands on its cash”.

“While the press release does not say it, cancelling this dividend also gives the company some scope to acquire further consolidate away-from-home assets in the UK soft drinks market once it is through the seasonal peak demands on its cash”, they added.

The shares slipped 4.6% to 1,140p in early trading on Tuesday.

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