Exchange rates hit profits at Games Workshop

Games Workshop, the Nottingham-based fantasy games manufacturer and retailer, is set to take a hit to its profits of around £5m after being affected by foreign exchange rates.

The company says it expects half-year profits to November 28 to come in not less than £86m – down from £91.m last year. This is despite an expected rise in turnover from £187m to £190m over the same period.

Russ Mould, investment director at AJ Bell, said: “After upsetting many of its loyal fans by saying they couldn’t create films or animations using its intellectual property, nor make 3D printed versions of its products, Games Workshop has now left shareholders feeling glum.

“Profit has been hit by unfavourable foreign exchange rates and higher costs for shipping goods and paying staff.

“Admittedly these issues are plaguing lots of companies but nonetheless it means a blot on Games Workshop’s track record for under-promising and over-delivering.

“This time it hasn’t been able to live up to expectations. When you’re a business who makes money from creating exciting fantasy worlds, delivering a harsh reality can be brutal.

“Games Workshop has commanded a premium rating for its shares in recent years after delivering impressive earnings growth. Sadly, the current news flow from the company has led some investors to question this high rating.

“But equally, there will be other investors taking a longer-term view who might look at the current share price weakness as a chance to buy a quality business at a more affordable price.

“A key attraction is Games Workshop’s intention to boost income from licensing its intellectual property for use in games, films and TV – hence why it has been taking a harsh stance on people using its assets without permission and payment.

“Licensing income more than doubled in its most recent half-year period, year-on-year, to circa £19 million thanks to important computer games deals. The market will want to see more of this good news in 2022.”