Churchill China PLC (LON:CHH) hiked its final dividend by 18% after the manufacturer of ceramic products posted 2018 results that beat its expectations.
Profit before exceptional items and tax jumped 26% to £9.4mln last year on revenue up 7% to £57.5mln as a strong performance in hospitality exports offset lower retail sales.
Operating margins before exceptional items improved to 16.1% from 13.9%.
READ: Churchill China expects its full-year operating performance to be ahead of current estimates after a strong finish to 2018
Total sales to hospitality customers increased by 10% to a new record of £52.5mln with export sales up 19% despite a “slight” headwind from foreign exchange rates.
Retail sales fell 16% to £5.1mln amid a challenging UK market, which led Churchill to exit unprofitable sectors in the nation.
Cash generated from operations rose to £8.3mln from £7.7mln.
Churchill declared a final dividend of 20.3p.
“2018 has been a very successful year for Churchill, we have exceeded our expectations in relation to business and financial performance,” said chairman Alan McWalter.
“2019 has started well and we believe that we can make further progress.”
Ahead of Brexit, the company has been stockpiling key materials and has set up a logistics facility in the Netherlands to service its European businesses.
A large part of the group’s revenue is earned outside the UK and it sources raw materials from overseas.
Churchill said while its contingency plan for disorderly Brexit may not fully offset the impact of the UK’s departure from the European Union, it believes it has prepared for the uncertainty sensibly and has the flexibility to manage the level of risk to the business.
Shares jumped 4% to 1,418p in morning trading.