In a trading update, the FTSE 250 maker of Warhammer said trading had “continued well” since its half-year results in January, with royalties ahead of the prior year due to new licence agreements, and as a result, expected pre-tax profits for the year ended 2 June 2019 to be around £80mln.
This is higher than the record-breaking £74.5mln reported in its last full year, while the 35p divi took the full year total to 155p per share from 126p previously, in line with the group’s stated policy of “distributing truly surplus cash”.
Although full-year profits are expected to be higher, the rise is not as dramatic as in 2018, when pre-tax profits nearly doubled from £38.4mln in 2017 to the £74.5mln figure.
House broker hikes target price
In a note, the company’s house broker Peel Hunt hiked their target price to 3,700p from 3,500p, saying the update showed “real momentum”.
The broker added that the company’s trade, retail, and online arms had all contributed to the higher profits.
“We think the company is a global market leader and these results show that the company is delivering”.
Success "hard to ignore", says analyst
Russ Mould, investment director at AJ Bell, said that while for the uninitiated the appeal of Warhammer miniatures and table-top war games "may be a mystery", it was "hard to ignore the successful niche the company is ploughing".
“Fresh from a slightly disappointing set of half-year results in January the company is back in the game with today’s news of a higher than previously guided profit for the full year. A special dividend provides a cherry on top for shareholders."
“In retail knowing your customer is key and this is an area in which Games Workshop excels. It is constantly looking to engage with its audience through a variety of different mediums. This underpins robust cash flow and resilient earnings and for as long as this hobby remains popular the company looks well positioned to benefit.”
Shares were up 9.6% at 3,626p.
--Adds broker change, analyst comment and share price--