- Better than expected full year
- Manageable tariff impact
- Further sales growth expected
Fantasy miniatures maker Games Workshop (GAW) worked its magic once more by revealing full year sales and profit ahead of May’s trading update, notching up a record year for the business.
Investors generally prefer companies to under promise and over deliver, so it is not surprising to see the shares gain more than 5% to top the FTSE 100 leaderboard.
The shares have been on quite a run over the last few months, advancing by almost 60%, driven by momentum across the business and strong IP (intellectual property) income from the success of video game Space Marine 2, whose performance was ‘well above’ expectations.
CEO Kevin Rowntree commented: ‘After a record year, we remain focused on delivering our operational plans and working tirelessly to overcome any significant obstacles that get in the way.
‘We will continue to give ourselves the freedom to make some mistakes, constantly working on improvements in product quality and manufacturing innovation,’ before adding, ‘Exciting times.’
RECORD YEAR
For the year to May 2025, core revenue increased by 14% to £565 million while volatile licensing revenue jumped by 69% to £52.5 million, of which 81% was from PC and console game licenses.
Total revenue increased by 17.5% to £617.5 million while operating profit was 29% ahead at £261.3 million. The business continued to be cash generative with net increase in cash, pre-dividends growing by 27% to £197.5 million.
Dividends per share increased by 24% to 520p and return on capital employed in the core business increased from 176% to 191%.
Referring to the Amazon (AMZN:NASDAQ) tie-up to adapt the Warhammer 40K universe into films and a TV series, the company said there won’t be any significant news in the short term, noting ‘these things take several years to bring to market’.
TARIFF IMPACT
Games Workshop estimates a circa £12 million impact to pre-tax profit in the current financial year, emanating from a 2% shortfall in the gross margin.
This is expected to be mitigated through efficiencies, although the company acknowledged it may well take longer than one year given the business is already ‘very efficient’.
Looking ahead, Games Workshop said it aims to deliver sales growth in every major country it sells in, with most incremental growth coming from the trade channel.
Analysts at Jefferies said: ‘While the combination of tariffs, release cycle and the non-repeat of Space Marine 2 is likely to lead to a more muted FY26, we think this is relatively well understood by the market.
‘Meanwhile, Core underlying momentum is very strong, underpinning the long-term growth outlook.’
