Overcapacity in the UK has been a challenge for ceramics manufacturer Churchill China, whose management has described conditions in the market in the last year as very competitive. Add fears over Brexit into the mix and it’s not difficult to see why domestic revenues were down 6 per cent in 2017. Management has decided to overhaul the approach in the UK, including a change in the sales leadership.
The impact of these changes aren’t expected until the second half of 2018, but in the meantime the group has been focusing heavily on building its international business. Hospitality products have had a particularly strong year, helping lift overall export sales 19 per cent. In 2017, overseas revenues contributed 55 per cent to the top line, up from 49 per cent in the previous year.
The group’s other main growth driver is the shift towards 'value added' products - ceramics that incorporate different colours, textures, patterns or shapes. These are higher margin and now account of 40 per cent of the group’s portfolio, up from 33 per cent last year. Broker N+1 Singer expects these high-margin products and exports to drive profit growth year on year and have upped their pre-tax profit forecasts to £8.2m in 2018, giving EPS of 59.7p (from £7.7m and 56.4p in 2017).
| CHURCHILL CHINA (CHH) | ||||
| ORD PRICE: | 920p | MARKET VALUE: | £101m | |
| TOUCH: | 890-950p | 12-MONTH HIGH: | 1,240p | LOW: 838p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 308p | NET CASH: | £15.6m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 43.2 | 3.4 | 25.2 | 14.6 |
| 2014 | 44.5 | 4.3 | 31.2 | 16.1 |
| 2015 | 46.8 | 5.0 | 37.3 | 18.3 |
| 2016 | 51.1 | 6.5 | 48.2 | 21.1 |
| 2017 | 53.5 | 7.8 | 58.4 | 24.6 |
| % change | +5 | +20 | +21 | +17 |
| Ex-div: | 26 Apr | |||
| Payment: | 24 May | |||
