The deal with Gul dates back to September 2011

The deal with Gul dates back to September 2011

Nichols has been hit with a fine of almost US$14m following a legal ruling in Pakistan.

The UK-headquartered soft drinks firm confirmed late yesterday (2 July) that the Pakistani High Court has found in favour of Gul Bottlers in the country. The two had been in dispute over Gul's claim of lost profits since a deal was secured in September 2011 for Gul to produce and distribute Vimto in Pakistan.

“The High Court has awarded damages against Nichols totalling PKR1.4m (US$13.8m) plus costs, which are to be assessed but are anticipated to be in the range of $1.7m to $2.6m,” Nichols said yesterday.

The company added that it “fundamentally disagrees” with the size of the award and is “considering … options for appeal”.

Back in March, Nichols flagged that it expected the litigation claim to cost around GBP2m (US$3.4m). The company saw its full-year profits for calendar-2013 slip due in part to the one-off cost.

“Whilst this is an extremely disappointing outcome,” Nichols said today, “there is no impact on future underlying trading expectations. The payment of this award in no way affects the group’s ability to continue with its strategy to invest in its brands and future growth plans.”

Nichols used today's statement to say that its trading in the first six months of this year “continues to be good”. Full-year results should come in “in line with management expectations”, Nichols concluded.