Character Group warns H1 results will be lower, but remains confident for the full year

Toy company Character Group, which brands include Peppa Pig, Fireman Sam and Scooby Doo, warned that results for the first of 2017 would be lower than last year due to steps taken to act against the low gross margin after the fall in sterling, while it is also developing a range of new products.

The AIM-listed company remained confident of meeting full year expectations, but forecasts that its results for the first half of 2017 will be lower than in the same period last year.

It said this was due to actions taken place in the final quarter of 2016 to mitigate against the reduction in gross margin, which was affected by marginally low sales due to the devaluation of sterling.

The company said the effect of its actions to combat the reduction in the gross margin are starting to take effect now and will be fully implemented in the second half of 2017.

Character Group expects international and domestic sales to grow in the remainder of the financial year.

Its cash position “continues to strengthen considerably” and the company maintained that it will continue its progressive dividend policy.

The performance of established brands, including Peppa Pig, Teletubbies, Minecraft, Fireman Sam, Scooby Doo and Stretch Armstrong, remained “very encouraging” as Character Group remained confident that the new season’s toys will deliver in terms of demand and sales.

Shares in Character Group were down 5% to 494p at 1141 GMT.