Churchill China remaining positive despite economic headwinds
STOKE-ON-TRENT pottery firm Churchill China has said it remains confident about its prospects for the coming financial year despite economic headwinds in the Eurozone.
The firm said the recent strengthening of sterling against the euro was likely to provide some headwind in relation to trade in Europe, while it was also mindful of the impact of general political and economic pressures across the continent.
“Despite this we believe that there will be further growth in hospitality markets worldwide and that our long term progress in this area will continue,” said chairman Alan McWalter.
Speaking in the firm’s annual results statement, he said: “We are confident that we have the right long term strategies to continue the development of our business and the resource to implement these plans. The current year has started well, and Churchill is well positioned to take advantage of its strong market position.”
The results show revenues increased by 3% to £44.5m (2013: £43.2m). Operating profit increased by 26% to £4.2m (2013: £3.4m). Operating margins improved to 9.5% (2013: 7.8%) mainly as a result of increased revenues, but with some contribution from a more favourable mix of business. Earnings before interest, tax, depreciation and amortisation increased by 18% to £5.9m (2013: £5.0m).
Pre-tax profit rose by 28% to £4.3m (2013: £3.4m), with the improved operating performance supported by a lower notional interest charge on pension fund liabilities. Earnings per share improved by 24% to 31.2p (2013: 25.2p).
The company said it had generated strong operating cash flows. Operating cash generation was £6.9m (2013: £4.6m) with strong profitability being supplemented by a positive working capital position and lower pension fund amortisation payments. Inventory levels fell during the period largely as a function of strong trading towards the end of the year. At the year end, net cash and deposit balances had risen by £2.3m to £10.5m (2013: £8.2m).
It said it continued to invest in its core business. Capital investment rose to £2.0m (2013: £1.5m) during 2014 with further investment in the development of its Stoke on Trent manufacturing facility.
“We have delivered a strong performance in 2014 and it is pleasing to note that this has been achieved in line with the strategies that we established some years ago. We have delivered progressive improvements in return from our Hospitality business and particularly from export growth,” said McWalter.
