OLDHAM-based toy firm Character Group which specialises in ranges like Peppa Pig and Stretch has issued a profit warning ahead of the publication of its results for the year ending August 31.

The company, headquartered in Lees Road, will make between £11 million and £11.5 million, slightly under the lower end of market expectations

The warning has been prompted by the performance of Danish firm OVG-Proxy in which Character bought a 55 per cent stake a year ago in a deal worth about £3.3 million.

In the trading update issued on the London Stock Exchange this week, Character said the failure of the Scandanavian retail market had led to the liquidation of Top Toy, Proxy’s largest customer.

It said: “This loss of sales has resulted in losses being sustained by Proxy in the year to August 31 and this has had a negative impact on the group's results as a whole.

This setback is considered by the board and the Proxy management to be attributable to the delayed recovery in retail in Scandinavia.

The statement went on: “The board continues to support the group's strategy to achieve growth through this niche territory, which will allow continued access to EU markets post-Brexit.

“In addition, the continued uncertainty over Brexit has led to a weakening of Sterling in foreign exchange markets, particularly against the US Dollar, and this has been a factor for Character's domestic business, given that a significant proportion of the group's purchases for UK distribution is made in US Dollars.

“As a result, this has put considerable pressure on our margins and negatively impacted the Group's results for the second half of the year ended August 31 and will likely continue to be a factor in the current year.”