Churchill China PLC on Wednesday said it expects softness in its key hospitality markets to continue into next year, citing the recent UK government budget and political uncertainty in key European markets.

The Stoke-on-Trent, England-based ceramic products manufacturer said implications of the recent budget, which included tax increases for employers in the UK, ‘will materially impact the cost base which can only partially be offset by price increases’.

It added: ‘This situation does not change the fundamentals of our business. We have high-quality differentiated products with significant growth potential as markets recover, particularly where we currently have low market share. All of which is backed by solid financials of operational cash generation and a strong unencumbered balance sheet.’

Chair Robin Williams said: ‘The current macro-economic uncertainty combined with significant increases in our cost base creates near term challenges. We are, however, confident that our core strategy will continue to deliver growth as markets improve.’

Churchill China shares fell 17% to 688.00 pence each on late Wednesday morning in London.

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