Planes, trains and automobiles provide Hornby story of success

Frank Martin, the chief executive, said that order books were up by a double-digit percentage on last year and was optimistic a good second-half performance could help to make up a first-half held back by problems at suppliers.

"We started seeing a bit of an uplift during the latter part of October, a little earlier than we've seen in previous years," he said.

"At this stage we're very positive about consumer demand."

Retailers are worried that Government plans to slash its debts by hiking taxes and cutting public spending could hit Christmas trading, and some have suggested shoppers are buying early in order to spread the cost.

Mr Martin said it was impossible to know if demand would be maintained, but noted that "historically, if demand is relatively strong, relatively early, it tends to be sustained".

He predicted that the Kent-based group, which also makes Airfix models and Corgi die-casts, could sell out of its 33,000 Toy Story 3 train sets across Europe, as well as 65,000 Toy Story 3 Micro Scalextric sets.

Profit before tax and one-off items fell to 700,000 in the six months ended September 30, from 1m in the same period last year, on a 2 per cent rise in turnover to 25.5m.

Mr Martin said the fall was entirely due to problems at suppliers, including disruption caused by the introduction of a new resource planned system at its biggest supplier in China.

These issues were now resolved, and the group was underscoring its confidence in the future by restoring its interim dividend at 1.7 pence a share, he said.

Hornby, whose founder invented Meccano construction toys early last century, said it had also agreed a deal with The Royal Mint to distribute collectable coins for the London 2012 Olympics, which Mr Martin said could boost growth from next year.

He added: "We expect that this agreement will form the basis of a long term relationship between Hornby and The Royal Mint."

He said house broker Numis Securities had nudged down its full-year profit forecast by about 300,000 to 6.5m to account for the dip in first-half profits, but that the group would work hard to try to beat that number. In 1901, founder Frank Hornby applied for a patent to protect an invention he called "Improvements in Toy or Educational Devices for Children and Young People".

It later went into production as "Mechanics Made Easy".

This eventually led to the establishment of Meccano Ltd.

The firm introduced toy trains in 1920.