Pulling away from low-margin retail trade helped Churchill China achieve a 16.4% hike in group pre-tax profit to £2.7m in the year to December 31 2011.
The hospitality side of the business delivered record sales of £29.2m, up 6.5% on the previous year, and operating profit from this sector increased by 16.2% to £4.7m.
On the retail side, operating profits went from £0.7m to £1.0m but on significantly lower turnover of £13.1m – down from £16.3m in 2010.
“This result reflected the fundamental repositioning of our retail business which has been underway for more than two years,” the company said. “Our strategy has been to focus our effort on delivering profitable middle market sales growth, primarily to the independent sector and to exit low-margin, volatile and inherently higher risk business mainly in the UK and USA.
“Lower sales levels have allowed us to reduce the cost base of the retail business and release significant amounts of working capital.”
Churchill said it was encouraged by its success with UK independent retailers, which had performed better than expected given the economic environment.
“Non-traditional retail outlets such as garden centres and cookshops are offering the consumer high quality branded merchandise with high design content that is appealing for giftware and other occasions, and appears more attractive than own-label products offered by many of the major retailers,” it said.
Overall group revenue was down slightly at £42.3m (2010: £43.7m) while operating profit rose to £2.7m (2010: £2.3m). Margins rose from 5.2% to 6.4%.
The Stoke-on-Trent company also underlined its commitment to maintaining production in the city.
“We are passionate about manufacturing in the United Kingdom and have invested almost £20m in our operations over the last decade to ensure that we will continue to be able to develop and manufacture the products our markets require effectively,” it said.
“Continued investment in UK manufacturing, sales and marketing and new product development will be a key feature of 2012.”