SALES of Hornby and Scalextric sets fell slightly in the run-up to Christmas, the Thanet-based company has announced.

But stronger sales of model railway accessories and a good showing by newly acquired businesses in Spain, Italy and France compensated for lower UK sales.

The company said the strategy of targeting collector markets across Europe would reduce its dependence on the UK market. It also said Scalextric USA had done well.

It added that new lines unveiled at the London Toy Fair had impressed visitors, in particular the new Hornby Digital Control system that is expected to revolutionise the way model railway enthusiasts operate their layouts.

The company has also launched its first products based on an exclusive licence to market slot racing products based on A1 Grand Prix, the World Cup of Motorsport.

Chairman Neil Johnson said: "In spite of a background of difficult trading conditions in the UK, the model enthusiast market remains robust and we expect to report a satisfactory result for the current financial year.

"More importantly, we are making very good progress in building a profitable hobby business across Europe. There is excellent potential to re-establish this business and the initial market reaction has been extremely encouraging.

"We will also be able to channel the technological developments recently launched in the UK into the revamped Lima product ranges."

He added: "The actions we have taken in acquiring brands and distribution businesses, coupled with the move of manufacturing of those brands into our Chinese sources lays the ground for future profit growth. The Board remains confident about the long-term performance that Hornby will deliver."