Character Group confident despite currency challenges

Toys, games and giftware company The Character Group issued a trading update on Wednesday, reporting that solid progress was still being made with the board expecting to deliver results for the year to 31 August that will meet market expectations.

The AIM-traded firm said its portfolio continued to be derived from own-developed, in-house ranges, including those produced 'under licence' and others sourced through exclusive distribution agreements.

“All our major product ranges have performed well,” the board said in a statement.

“We are very fortunate to continue to have strength and depth across our brands, coupled with a high number of long established customer and supplier relationships.”

Character’s board noted a recent extension to its portfolio - the Stretch Armstrong, produced under a master license agreement from Hasbro and marketed and sold on a global basis.

It said sales in both the UK and international markets started extremely well and the company is currently developing a wider range of products within the brand.

“Another exciting new product range launched recently is Twozies - a girls' collectable item.

“Early results are very promising, and the board is confident that Twozies will become one of our top 10 brands in 2017.”

The Character Group said a significant proportion of the company's purchases are made in US dollars and, therefore, the increasing strength of the USD against sterling was continuing to put pressure on group profitability.

“Nevertheless, the board remains of the view that it can continue to mitigate the resulting increased costs.

“This is being achieved through the expansion of our international business, which generates revenue and profit in USD, and by our continuing active programme of monitoring all costs and rationalising operations where possible through increased efficiencies.”

The firm’s balance sheet continued to strengthen, the board reported, and working capital had been tightly managed, with no long-term debt and the business remaining cash generative.

“Against this backdrop, the directors remain confident that the group shall continue to deliver progressive returns which will further enhance shareholder value,” the board explained.

“The board looks forward to updating shareholders further when preliminary results are announced in early December.”