Shares in Character Group PLC (AIM:CCT), the toy designer and distributor, surged 13% to 279 pence after the company said full-year profit before tax is expected to be significantly above current market expectations.
The upgrade came alongside half-year results showing a 15% rise in pre-tax profit before highlighted items to £2.4 million, despite a 9% fall in revenue to £48.3 million as US tariffs weighed on sales.
The first-half profit was double that achieved in the entire 2025 financial year.
Gross margin improved to 31.7% from 29.3%, driven by a more favourable geographical sales mix and better foreign exchange rates, while cost management measures helped underlying earnings per share rise 29% to 11.06 pence.
The board increased the interim dividend by 33% to 4.0 pence per share.
Character Group said it expects revenue for the full year to be broadly flat but anticipates maintaining the improved margin into the second half, supported by continued cost discipline and new product launches.
The company highlighted strong prospects for several brands, including its leading Goo Jit Zu range, the new MagMiMi line and Mushykinz, which it expects to become one of its largest volume lines this year.
Its games category is forecast to be the fastest-growing segment.
The letting of its surplus Infinity House warehouse in Lancashire will generate £773,000 in annual rent and associated overhead savings, with a potential sale of the property for £9.8 million in cash before the year-end, which would substantially strengthen the balance sheet.
Character Group has no long-term debt, held £13.7 million in cash at the half year and has more than £40 million of unutilised headroom under its banking facilities.
The company also has a £3 million share buyback programme underway, having repurchased nearly 227,000 shares so far at a cost of approximately £550,000.
The board said the full-year outlook is dependent on achieving forecast performance in the fourth quarter, which is the group's key trading period, and will provide a further update after the year-end.