Strong hospitality market boosts Churchill China profits by 56%
STAFFORDSHIRE pottery firm Churchill China has announced strong interims with pre-tax profit up 56% on a positive showing from its Hospitality division.
Group revenue for the six months to June 30, 2013 was £19.7m (2012: £19.2m), while pre-tax profit rose to £1.1m (2012: £0.7m). The board has recommended an increased interim dividend of 4.9p (2012: 4.8p).
The group said it had benefitted from a better mix of sales, increased manufacturing volumes and a more favourable sterling / euro exchange rate. Earnings before interest, tax, depreciation and amortisation increased by £0.2m to £1.8m.
Total revenue in its Hospitality business increased by 8% to £15.0m (2012: £13.9m) continuing the historic trend of steady growth. Churchill said it had consolidated its position as UK market leader with creditable sales growth of 8% in a period when new installations and the regional dining out market in general could it said, best be described as patchy.
It said return on investment in overseas hospitality markets had been slow as exporting presented a raft of extra challenges including currency fluctuation, trade barriers, differing product requirements and indigenous competition. It said it was therefore pleasing that long term investments in new products, market development and people were yielding tangible benefits as exports rose by 8%, broadening the customer base.
Revenues in the Retail business were affected by increased costs on imported ranges and declined by £0.6m to £4.7m. It said the adverse effect of the EU Anti dumping duty on Chinese ceramics had been partially mitigated by the transfer of Churchill’s sources of supply to other countries. UK consumers were, it said, taking time to adjust to new higher price points resulting from the increase in duty.
Nevertheless, it said it was delighted with the success of its Caravan Trail, Hidden World and Little Rhymes ranges which have proved very popular.
In outlook, it said it anticipated that its Hospitality business would remain healthy both in the UK and in the majority of export markets. It expects to continue to reap the benefit from a long term investment programme. And while the Retail product range is strong, it said it expected sales to remain subdued for the remainder of the year.
Alan McWalter, chairman of Churchill China, said: “We have started the year with a very encouraging first six months and current trading levels remain good for the group as a whole. If current sales trends persist through the remainder of 2013, in particular through the important fourth quarter, we would expect to deliver a full year performance at the higher end of our initial expectations.”
