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Churchill China reports serious slowdown, flags redundancies
11th Jun 2020 12:54
(Sharecast News) - Churchill China updated the market on its operations amid the Covid-19 crisis on Thursday, reporting that the impact of lockdowns on its sales to hospitality markets had been "significant".
The AIM-traded firm, which was holding its annual general meeting, said that following a "strong start" to the year, trading in April and May was well below normal levels.
Chairman Alan McWalter said that a number of actions were implemented to mitigate the effect of that reduction in activity, with output, cost and liquidity levels being "carefully managed".
"We have, however, continued to despatch orders from our UK, European and North American warehouses throughout the second quarter of the year," McWalter told shareholders.
"We are now beginning to see the first signs of an improvement in trading with growing levels of orders and activity.
"Hospitality outlets in our major European markets have now largely re-opened albeit with some level of restrictions."
He said the UK's exit from lockdown had started, and the firm was expecting increased market demand in the next few months.
However, it was still anticipating overall monthly revenues to remain below 2019 levels for some time, as hospitality market activity readjusted.
"During May we re-opened our manufacturing operations in Stoke-on-Trent at a reduced level of output and under safe working conditions.
"Output will now be progressively increased until revised operating levels are reached later in the summer.
"We have commenced a process to adjust costs across our business consistent with these lower levels of activity and as such we have entered into a consultation period with our employees in relation to the potential reduction in the size of our workforce."
Alan McWalter said management hoped that the period would allow the company to mitigate the effect of that workforce reduction on employees, adding that no decision had yet been made on the number of redundancies that could result from the process.
"Our operational and financial position remains strong and we will continue to target growth in export markets where we have significant potential to increase both market share and revenue over the long term.
"We have an experienced management team and the company retains a high degree of flexibility to respond to the anticipated recovery in business conditions.
"We will also continue to invest in the development of our business."
At 1251 BST, shares in Churchill China were down 4.98% at 1,050p.
The AIM-traded firm, which was holding its annual general meeting, said that following a "strong start" to the year, trading in April and May was well below normal levels.
Chairman Alan McWalter said that a number of actions were implemented to mitigate the effect of that reduction in activity, with output, cost and liquidity levels being "carefully managed".
"We have, however, continued to despatch orders from our UK, European and North American warehouses throughout the second quarter of the year," McWalter told shareholders.
"We are now beginning to see the first signs of an improvement in trading with growing levels of orders and activity.
"Hospitality outlets in our major European markets have now largely re-opened albeit with some level of restrictions."
He said the UK's exit from lockdown had started, and the firm was expecting increased market demand in the next few months.
However, it was still anticipating overall monthly revenues to remain below 2019 levels for some time, as hospitality market activity readjusted.
"During May we re-opened our manufacturing operations in Stoke-on-Trent at a reduced level of output and under safe working conditions.
"Output will now be progressively increased until revised operating levels are reached later in the summer.
"We have commenced a process to adjust costs across our business consistent with these lower levels of activity and as such we have entered into a consultation period with our employees in relation to the potential reduction in the size of our workforce."
Alan McWalter said management hoped that the period would allow the company to mitigate the effect of that workforce reduction on employees, adding that no decision had yet been made on the number of redundancies that could result from the process.
"Our operational and financial position remains strong and we will continue to target growth in export markets where we have significant potential to increase both market share and revenue over the long term.
"We have an experienced management team and the company retains a high degree of flexibility to respond to the anticipated recovery in business conditions.
"We will also continue to invest in the development of our business."
At 1251 BST, shares in Churchill China were down 4.98% at 1,050p.