AIM-listed toy maker Character Group (LON:CCT) raised its FY26 earnings guidance after a surge in H2 sales. The firm now sees pre-tax profit beating current market expectations by around 20%.
Improved margin and raised guidance
The maker of Doctor Who, Power Rangers and Peppa Pig toys, among other products, said it had a ‘strong finish’ to its full year. Sales in July and August were ‘very encouraging’, it added.
While sales in the US in particular were lower, the UK and Scandinavia saw a resurgence of demand. Having reversed the drop in H1, sales for the year to the end of August are now expected to be flat on FY25.
More importantly, the improved gross margin reported in H1 has carried over into H2 leading to the increase in guidance. The current consensus puts FY26 pre-tax profit at around £5 million against £1.2 million in FY25.
The company also flagged the rise in its cash reserves to £20 million following the sale of its Lancashire site. The board is currently assessing Charatcer’s capital requirements and the potential to return excess cash to shareholders.
Despite the success of the games software market, there is clearly still a place for non-screen related entertainment. Character’s success in selling physical products echoes that of Games Workshop (LON:GAW) and TheWorks (LON:WRKS).
The firm says trading remains positive as it gears up for the all-important Christmas selling season. And with its healthy cash position it says it is ‘looking to the year ahead with optimism’.
House broker Allenby Capital raised its FY26 pre-tax profit forecast from £5 million to £6 million, in line with the new guidance. It also introduced forecasts for FY27, with sales seen rising 7% to £107 million pre-tax profit rising 17% to £7 million.
