Shares in Games Workshop, the renowned creator of Warhammer, fell by three per cent today following a warning from the company about the potential impact of rising costs on its operations.
In its half-yearly financial report, the FTSE 100 giant disclosed a significant increase in profit before tax, which soared from £95.2m in the first half of the previous year to £126.8m, as reported by .
This performance was described as "comfortably ahead" of the firm's earlier guidance of £120m by analysts Charles Hall and Andrew Ford from Peel Hunt, prompting them to raise their full-year profit forecasts from £210m to £220m.
Despite this positive outcome, concerns have been raised by investors regarding cost pressures that could affect the business, particularly in light of employer national insurance increases and the higher minimum wage introduced in the last Budget. Although Games Workshop has stated that it does not anticipate the policies from the Budget to materially affect its financial results this year, since it already pays its staff the living wage, there is still the possibility of "third party cost increases" in the coming year.
"At this stage we have not been informed of any significant changes," the company commented. "We await confirmation on any other external tariffs or tax changes and we will manage them accordingly."
Nevertheless, despite these concerns, analysts remain content with the company's performance, highlighting a 12 per cent surge in core sales during December alone.
Russell Pointon, director of consumer at Edison Group, commented on Games Workshop's performance: "Whilst the core business put in a strong performance, growing by 16 per cent at constant currency, licensing revenue was the star performer with 160 per cent constant currency growth helped by the release of the Space Marine 2 video game," The company also announced a significant dividend increase, taking dividends to £4.20 per share, up from the £3.15 declared at the same stage last year. Pointon added: "It is clear that management continues to plan for growth in the medium term with planning permission secured for a fourth factory in Nottingham and the purchase of two further properties in the period," All three analysts who cover Games Workshop give a Buy rating to its stock, a rare full endorsement among FTSE 100 stocks.
However, the number of analysts covering Games Workshop is unusually small for a FTSE 100 company, likely due to its recent entry into London’s main index. "The shares have performed well, but there continues to be clear momentum and upside to numbers," concluded Hall and Ford.
