Pottery firm Churchill China has said it expects to meet profit forecasts despite a weak retail environment.

The Stoke-based company, which issued a profits warning last May, said sales during the end of year trading period had been "satisfactory" and it expected to meet current pretax predictions for the year to December 31.

"Sales to hospitality customers have continued the modest growth shown in the first half year, with new products continuing to perform well," the group said.

However, Churchill China confirmed that sales to retail customers had, as expected, reduced.

The firm - which supplies this side of the business entirely from China and Colombia - said it had taken a number of steps to reduce cost. These had "continued to deliver the anticipated savings", Churchill China confirmed.

The company also said operating cash flow has been strong in the second half of the year and the group's year end cash position was significantly better than earlier expectations.

The sale of surplus property is progressing well, it added.

In May, Churchill China released a profit warning claiming the rise in gas prices had dented margins.

In September the company revealed first-half pretax profits of £605,000 - well below the £1.5 million notched up in 2004.