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Games Workshop interim numbers confirm December update

The numbers aligned closely with an update issued at the start of December, although cheer came in the form of yet another dividend

Warhammer
Games workshop owns wargaming figurine franchise Warhammer

Games Workshop Group PLC (LON:GAW) has reported its interim numbers which have essentially confirmed headline figures announced in a December update.

The owner of wargaming figurine franchise Warhammer reported constant currency revenues of £124.2mln for the period, up from £109.6mln a year ago, while operating profits climbed to £40.8mln from £38.1mln.

READ: Games Workshop shares on the up after solid first half trade

The numbers were more or less in line with the headline figures delivered in the group’s pre-Christmas trading update when it forecast revenues of £124mln and operating profit of £41mln.

The company also announced a dividend of 25p per share, following closely behind a 30p dividend in December which took the total year-to-date (YTD) dividend to 120p including the 65p of dividends in the reporting period.

Kevin Rountree, chief executive, said the dividend was in line with the firm’s policy of “distributing truly surplus cash”, although net cash generated from operations in the period was down to £27.9mln from £36mln last year, mainly due to an increase in UK corporation tax.

Online goes into reverse

Across its segments, revenues in the Trade and Retail businesses were up at £60.7mln from £48mln and £42.3mln from £39.6mln respectively, while Online suffered a slight decline to £21.1mln from £22mln which the company blamed on flat sales in its Citadel online store and small revenue drops in its Forge World and Black Library websites.

The group also said that despite “record sales and profit levels” in the period, its gross margin and stock levels were “not currently where we’d like them to be”. However, it added that the completion of a new factory in Nottingham and planned upgrades to warehousing capacity in Memphis and Nottingham would help maintain current volumes and increase efficiencies.

For the December period, the group said trading had been in line with its sales performance in the first half.

Looking to the second half, the company said it would continue to focus on “core values and the activities that drive the business forward”.

The group also put out a brief Brexit statement saying it was reviewing plans to mitigate and possible disruption to supply chains and sales channels.

Broker nudges up forecasts

In a note to clients, analysts at City broker Peel Hunt upgraded their pre-tax profit forecasts by 3% to £70mln for the 2019 fiscal year on the back of what they said was a continued positive trend in sales over December.

The broker also said that the operating profit increase was “a great result” given a “very tough” comparative from the first half of the previous year, when the launch of a new edition of Warhammer 40k had boosted sales.

Peel Hunt has a ‘Buy’ rating on Games Workshop with a price target of 3,500p.

In early trading Tuesday Games Workshop shares were down 1.3% at 3,110p.

Quick facts: Games Workshop Group PLC

Price: 4846 GBX

LSE:GAW
Market: LSE
Market Cap: £1.58 billion
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