Strategy changes are helping Churchill China make progress and, with half-year operating profit having risen 10.8 per cent in the period to £736,000, performance again beat brokers' expectations. But amid anaemic economic conditions the shares, which have risen nearly 20 per cent since March, look set to mark time.
Static sales reflected flat UK demand for crockery from pubs and clubs. Add in the wet summer weather and the hospitality division's performance could have been dreadful. But it wasn't - reflecting an impressive 25 per cent jump in exports to £5.6m, from total divisional sales of £13.94m. Demand was especially strong in Russia and Turkey, while North American revenues have recovered. So a fall in divisional operating profits from £1.84m to £1.58m was a reasonable result.
In addition to nurturing exports, management has been reducing its retail focus as major customers - essentially supermarkets - continue to squeeze margins. In fact, retail turnover fell 16 per cent to £5.24m, but profits nearly tripled to £481,000 - Churchill has found that independent retailers, gift shops and garden centres are much more congenial stockists.
House broker N+1 Brewin has nudged up its forecasts and now expects full-year adjusted pre-tax profit of £2.9m, with EPS of 20.1p (19.2p in 2011).
CHURCHILL CHINA (CHH) | ||||
|---|---|---|---|---|
| ORD PRICE: | 333p | MARKET VALUE: | £36.3m | |
| TOUCH: | 325-340p | 12-MONTH HIGH: | 338p | LOW: 263p |
| DIVIDEND YIELD: | 4.2% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 250p | NET CASH: | £4.3m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£000) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 19.2 | 689 | 4.70 | 4.80 |
| 2012 | 19.2 | 841 | 5.90 | 4.80 |
| % change | - | +22 | +26 | - |
Ex-div: 5 Sep Payment: 4 Oct | ||||
