Hornby, the maker of model trains, Corgi toys and Scalextric sets, has issued its third profit warning in less than two years after being hit by £1.2 million of losses.

The small-cap toymaker yesterday said it had lost an additional £200,000 in the past quarter because of foreign exchange rate movements, taking total losses for the year to £1.2 million. It follows a warning by Hornby in January that prolonged problems with a Chinese supplier would result in a £1 million loss for the year to March 31st.

It said the supply delays meant it suffered a decline in the value of currency held to pay its Chinese suppliers.

Hornby paid £600,000 to end its agreement with the Chinese manufacturer and said yesterday it now expected a “gradual improvement” in business. – Copyright The Financial Times Limited 2014