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Churchill China's 2025 results show profit down and dividend cut to 21.0p, but with resilient cash generation, a robust balance sheet and operational strengths intact. Margins at 7.9%.
This article covers information on Churchill China PLC.
LON:CHHLast updated:
Churchill China’s final results show a business absorbing a softer hospitality market while keeping cash generation healthy and pressing on with factory upgrades. Revenue slipped 2.6% and margins tightened, but cash rose and inventories were trimmed, leaving the balance sheet in good shape heading into 2026.
| Metric | 2025 | 2024 |
|---|---|---|
| Revenue | £76.3m | £78.3m |
| EBITDA | £9.4m | £11.7m |
| Profit before tax | £6.0m | £8.5m |
| EPS | 39.7p | 57.9p |
| Cash and cash equivalents | £10.8m | £10.1m |
| Dividend (full year) | 21.0p | not disclosed as total in RNS (interim 11.5p; final 26.5p) |
Hospitality stayed challenging. New installations were delayed, so Churchill leaned more on replacement orders (ongoing re-buys to replace breakages). Even so, performance held up across Europe, North America and the UK, with management believing market share improved.
Churchill deliberately cut production volumes to reduce inventory, which lifted unit costs and squeezed margins, layered on top of April 2025 wage and NI increases. The trade-off: year-end stock fell by £2.0m, agility improved, and cash strengthened.
Operational initiatives are biting: improved yields, more automation and electrification, and a big push on inkjet-decorated products that raise flexibility and margins. Service remains a clear differentiator – over 98% of UK customer deliveries were made within 48 hours and over 70% of European orders were shipped within 24 hours from the EU hub.
Energy is a key input. The Group is “materially hedged” with open exposure to circa 16% of 2026 gas costs and 64% of 2027 gas requirements forward purchased. A 2.9% price increase was implemented at the end of 2025. Capital expenditure continued on automation, with new plate making kit and the electrification of glazing pre-heats that delivered a 4% energy reduction and better yields.
Despite lower profit, cash performance was robust. Net cash from operating activities came in at £7.4m (2024: £3.6m) and cash ended the year at £10.8m, up £0.7m. Capex was contained at £2.5m and dividends paid were £3.7m. Working capital moved sensibly – inventories down £2.0m, receivables up £1.3m after a very strong November, and payables up £0.5m.
In short, Churchill preserved financial flexibility. That matters because it allows continued investment in the factory and the commercial pipeline without stressing the balance sheet. Net assets stood at £61.5m and the defined benefit pension scheme remains in surplus at £7.7m (2024: £8.2m).
The Board proposes a final dividend of 14.0p, making 21.0p for the year. That’s a notable reset from last year’s distribution, framed as “difficult but prudent” in the current backdrop. If approved at the AGM on 29 May 2026, the final dividend will be paid on 4 June 2026 to shareholders on the register on 1 May 2026. The Board’s stated ambition is to return to year-on-year dividend growth when the Group is back on a growth trajectory.
By activity, Ceramics revenue was £70.2m (2024: £71.1m) and Materials revenue was £12.5m (2024: £13.1m) before intra-group eliminations. Materials (Furlong Mills) outperformed internal expectations despite a softer local ceramics market.
Profit before tax of £6.0m equates to a 7.9% return on sales (2024: 10.9%). The squeeze reflects under-recovery from lower factory throughput, planned stock reduction, and higher labour costs. EPS fell to 39.7p (2024: 57.9p). These are the numbers behind the dividend cut and the cautious tone on costs.
This is a solid if unspectacular set of numbers in a tough market. Negatives first: revenue dipped, margins compressed to 7.9%, EPS fell to 39.7p, and the dividend was reset to 21.0p. The Rest of World slowdown shows how exposed the project pipeline can be, and energy remains a swing factor even with hedging.
On the positive side, Churchill did what disciplined manufacturers should do in a downcycle: protect cash, cut excess stock, keep service levels high, and push productivity. Operating cash flow was strong, the balance sheet remains robust, and the US and European trends improved into H2. The capex programme is already delivering energy and yield gains, which should support margins when volumes recover.
Why it matters: if 2026 sees a modest recovery in hospitality projects – particularly in Europe – Churchill’s improved factory efficiency and its service edge position it to translate incremental volume into better margins. The tariff backdrop and a stronger pipeline help that case. Until then, the lower dividend feels sensible, keeping powder dry for growth and continued investment.
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