Character Group warns on profits

British toy company Character Group warned on profits on Friday as a number of factors, including difficulties in Scandinavia, dented the business in the tail end of the year.

Character cautioned that pre-tax profits looked set to come in slightly below the lower end of its guidance after the Scandinavian retail market failed to fully absorb the sales vacuum caused by the liquidation of Top Toy - the largest customer of its OVG-Proxy ApS unit - which swung to a loss.

The AIM-listed company also said that continued uncertainty surrounding Brexit had hurt its domestic business, given that a significant proportion of its purchases for UK distribution were made in US dollars.

"As a result, this has put considerable pressure on our margins and negatively impacted the group's results for the second half of the year ended 31 August 2019 and will likely continue to be a factor in the current year," said Character.

"Through a combination of these factors, the profit before tax for the group for the year ended 31 August 2019 is likely to be in the range of £11m-£11.5m, slightly under the lower end of current market expectations."

Nevertheless, Character assured investors that the board remains confident in the company's continued profitable performance and balance sheet strength and will be recommending that the final dividend be maintained.

At 1130 BST, the shares were down 4.5% to 353.50p.