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(Alliance News) - Churchill China PLC on Thursday said Covid-19 presented significant challenges in the first half of 2020 following a strong performance in the first two months of the year.
The supplier of tabletop products swung to a pretax loss in the first half ended June 30 of GBP382,000 from a profit of GBP4.3 million a year prior.
Revenue was down 41% to GBP18.9 million from GBP31.9 million a year prior.
Churchill China said growth achieved in the first quarter of the year was offset by substantially lower revenue during the second quarter. Ceramics sales increased by 33% in the first two months of 2020 but then were severely affected by lockdown measures and in April were only 9% of the equivalent period a year prior.
The company said: "We have managed our cost base carefully during the lockdown period. Given the need to operate safely and to adjust our short term output levels, the majority of our workforce were furloughed during March, with a skeleton staff remaining to manage the business and to plan and prepare for re-opening.
"Scale level production was re-commenced during July and is expected to reach 70% of 2019 levels in August. We retain a degree of flexibility to amend these production levels should market demand vary."
Churchill China said that the geographic spread of its business has been a major benefit and plans to prioritise investment in growing its European sales as this area has seen the fastest recovery.
Churchill China said it believes that it still has the capacity to propose an interim dividend but would review its dividend policy in December.
The company is not in a position where it can assess for how long and to what extent Covid-19 will affect revenue and so cannot give any guidance for the future as of yet.
Chair Alan McWalter said: "The impact Covid on all our markets has been substantial but we have responded well to the initial challenges and have orientated Churchill to the new business environment.
"We have many long term advantages; our business model remains strong, we have well invested and flexible operations, a strong balance sheet and an experienced and committed workforce."
He added: "Churchill remains a resilient company with a strong market position and a geographically wide spread of business within the hospitality sector."
Churchill China shares were down 6.3% at 1,007.00 pence each on Thursday afternoon in London.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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