Continuing supply chain problems have contributed to model maker Hornby posting a pre-tax loss of £700,000 in the six months to September.
In an interim report Hornby said turnover in the period was £22.5 million, down 4.3 per cent on the same period last year.
The report said disruption to its supply chain, caused by its largest Chinese supplier closing a factory last year, would continue into the second half of the year.
In the report executive chairman Roger Canham said: “The model rail brands have again borne the brunt of the supply chain difficulties both in the UK with Hornby and across our other European brands as well.
“Last year we reported that the group’s historically largest supplier had closed the factory that produced our goods and we had sought to reallocate production from that supplier wherever possible.
“While this has inevitably caused further supply chain disruption in the first half of this year that will continue into the second half, it is a necessary step to recovering control over our supply chain for the future.”
The report said the company was working through “the strategic restructuring of our supplier base” but the second half of the year should be financially stronger.
The company has shifted some sourcing to India and brought some production to the UK.
Canham said: “The board is continuing to work with its manufacturing partners to ensure we have a more reliable supply chain. We are making progress on this and when this is rectified the impact on our performance will be positive.
“Trading in the last couple of months has been strong and looking forward to Christmas, we have some exciting products in the market place supported by a strong promotional push. Overall, I am pleased that looking ahead the future outlook continues to improve.”