Export success offsets declining UK market for ceramics firm

Companies like Churchill China could be put under pressure from overseas manufacturers

Strong export growth has offset declining UK market conditions for Stoke-on-Trent ceramics manufacturer, Churchill China.

In the six months to June 30, the company said overall revenues had increased across all its businesses with strong export growth in Hospitality more than offsetting a quieter UK market and a further planned contraction in Retail activity.

Exports now represent 57% of the group’s revenue.

Total revenue from Hospitality customers increased by £2.3m (11%) and reached a new high of £22.8m (H1 2016: £20.5m); within this, exports grew by £2.6m (24%) to £13.2m (H1 2016: £10.6m). Export growth in constant currency terms was 12% (H1 2016: 24%).

It said it had continued to progress well against its strategic aim of growing its presence in Europe, with revenue increasing by £1.7m (24%) in the first half.

“We identified Europe as a market for development several years ago and we have delivered strong and consistent growth from our focus and investment. We have improved our distribution in key regional markets and increased the level of resource applied to the market as a whole,” it said.

“We now have a strong, scalable presence in Europe, but believe our relatively small market share will continue to allow us to generate further growth opportunities.”

It has also increased revenues from its other target export regions, North America and the Rest of the World. In the first half year Hospitality sales to these markets grew by 20% and 27% respectively and it said while these were at an earlier stage of development, the group had refined its forward development plans to reflect the growing number of opportunities being identified.

It said that as expected, UK revenues continued to be impacted by a slowing of growth in the market, particularly in respect of the rate of new investment by major end users. Product replacement sales continue to be satisfactory, it added.

Retail revenues declined from £3.5m to £2.9m as it switched manufacturing resource to Hospitality in line with the strategic emphasis.

It said that alongside its plan to grow revenues in Hospitality, particularly in export markets, it had also re-positioned its product range towards added value differentiated products.

“We believe this move both improves the sustainability of our market position and offers long term profit returns. New product development remains a key element of our overall business plan alongside our traditional virtues of service and product performance,” it said.

Alan McWalter, chairman of Churchill China, said: “Our trading in the first six months of 2017 maintained our record of improved performance established over several years. Given the opportunities available to us, we expect to continue to grow and diversify our export sales and to increase the proportion of well designed and differentiated products sold by our business.

“Trading momentum has been maintained since June 30 and we approach the key trading period in the year with confidence. We continue to expect that we will meet our targets for the second half year and remain positive in relation to our prospects for further progress.”

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