Churchill China (LON: CHH), the Staffordshire-based tableware and ceramics maker, published unaudited interim results earlier today showing profit after tax down 26.1% to £1.7m for the six months to 30 June, as weaker UK hospitality demand and materials sales weighed on the business.
Revenue fell 2.9% to £37.4m from £38.5m a year earlier, while operating profit before exceptional items dropped 17.9% to £2.3m. Statutory earnings per share fell 27.1% to 15.3p. Shares were indicated at 373p in pre-market trading, up 2.9% from Friday’s close of 362.5p, with the London market yet to open.
The headline profit fall looks stark, but management held the interim dividend flat at 7.0p per share, unchanged from last year and payable on 16 October. That decision, alongside reaffirmed full-year profit guidance, appears to explain the positive pre-market indication, even as the top line shrank.
UK hospitality sales fell 3.3% and materials sales dropped 16.5%, though Europe and US sales edged ahead of last year. The company also booked £220,000 of exceptional costs, covering ERP system implementation and pension buy-in advisory work. Management pointed to quarter-on-quarter margin improvement as evidence the business has stabilised rather than deteriorated further, with full-year profitability still expected in line with prior guidance, contingent on the fourth quarter, the company’s most significant trading period.
The results coincided with a leadership change, as James Roper becomes chief executive, succeeding David O’Connor. “As I take on the role of Chief Executive Officer, I am proud to continue my family’s long association with Churchill and to lead a business with such a strong heritage, market position and culture,” Roper said. “While near-term market conditions remain challenging, I am confident in the strength of our competitive position and product proposition. We are well placed to outperform the markets in which we operate and to create long-term value for shareholders.”
Churchill China also disclosed a change of nominated adviser and sole broker to Panmure Liberum on the same morning, alongside a continuing search for a new chief financial officer.