LONDON (ShareCast) - More people are eating out as the UK economy improves, helping Churchill China to serve up higher half-year profits and dividends.

Churchill said its hospitality business, which supplies crockery to restaurants, pubs and conference venues, boosted sales by 12% to a record £16.8m in the six months to 30 June.

The division increased sales by more than a fifth in continental Europe, despite some impact from the strong pound, and boosted UK revenue by 7% against a year ago.

The company said the rise reflected more expansion of the eating-out market, particularly in the pub and restaurant sector, where it benefited from a major refurbishment project.

Churchill said revenue growth was likely to slow somewhat against stronger comparatives in the second half, but it remained confident of being able to develop its hospitality business steadily.

"Our new product launches have been well-received and we continue to research, design and introduce successful new ranges," Churchill said.

Sales in the group's retail operation, which makes china for brands such as Jamie Oliver, Cath Kidston, Disney, Alex Clark and Queens, fell £600,000 to £4.1m as the group focused more on its hospitality business.

Despite the reduction in revenue, the effect on profit contribution, which fell by £100,000 to £200,000, was mitigated by a better margin mix and cost-cutting.

"We continue to develop our sales under the Queens and Churchill brands, which we believe will provide a more stable long term position," Churchill said.

Chairman Alan McWalter said: "The board remains confident that we will achieve a strong performance for the year as a whole in line with our expectations."

Shares in Churchill rose 17.5p or 4% to 460p at 12:09 in London.

PW

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