Hornby issues profits warning

The group had hoped sales of its merchandise would drive a bounce-back in profits but admitted that demand for London 2012 items - such as model taxis and buses - had been lower than expected.

Faced also with major disruption to one of its largest suppliers in China, Hornby, based in Margate, Kent, said it is now expecting to break even in this financial year.

The group - which makes model railways, Scalextric racing cars and also owns the Airfix and Corgi brands - has been hit by weak consumer spending amid the recession and saw profits fall from £4.5m to £3.4m in the year to March 31.