Merseyside-Based Nichols: Levi Roots and Price Increase

merseyside-based nichols: The 50% tax on the retail price of non-carbonated sugary drinks was brought in at the start of December, according to The Guardian. Norwegian sugar tax sends sweet-lovers over border to Sweden Read more Merseyside-based Nichols, which is also behind Levi Roots and Sunkist drinks, said it would not be able to determine how badly sales would be affected by the price increase until the end of the Ramadan trading period. The Middle East is an important market for Nichols because growing numbers of Muslims break their Ramadan fast with a glass of Vimto. However, it warned the impact could result in 2020 profits falling materially below current expectations . Shares in Nichols were down 11% on Monday afternoon, at 15.25. Nichols has a net cash balance sheet and generates operating margins in the high teens with returns on capital employed to match, so some investors may be persuaded to view this as a short-term blip, although the ongoing regulatory pushback against sweetened drinks is a trend that must clearly be followed carefully, he added. Russ Mould, an investment director at stockbroker AJ Bell said The suggestion that profits could be materially' below current forecasts implies, by a crude rule of thumb, a downgrade of perhaps some 20% from the 2020 consensus of a pre-tax profit of 34.2m, he said. (news.financializer.com). As reported in the news.