Toy manufacturer reducing dividends due to Trump tariffs' impact on Peppa Pig toy sales
Toy Giant Character Slashes Dividend Amid Trade War Uncertainty
Character Group, the UK toymaker behind iconic brands like Teletubbies and Peppa Pig, has slashed its interim dividend as the ongoing US trade war poses a threat to sales in 'all key territories.'
The company, based in New Malden, was forced to withdraw full-year profit guidance last month due to Trump's 'liberation day' tariff announcements. As the UK and Scandinavia are among their key markets, and US sales accounted for about 20% of their turnover in 2024, the increased tariffs have put pressure on their revenue streams.
Character Group also outsources most of its production to China to maintain competitive pricing, which is another factor contributing to its predicament. In the six months to February 29, 2025, revenues slipped 8%, reaching £53 million due to the harsh trading conditions experienced around Christmas. However, the company managed to boost gross margins, delivering a pre-tax profit of £2.1 million, in line with the same period last year.
Despite the 90-day reduction in tariffs between the US and China giving hope for a negotiated resolution, ongoing uncertainty remains. Customers worldwide have become more cautious and are hesitant to commit to orders as they weigh the risks of an unpredictable trade environment.
Character Group declared an interim dividend of 3p per share, significantly lower than the 8p at the same time last year, and compared to a final dividend of 11p per share for 2024. However, the company's board remains optimistic that the group will remain profitable in the current financial year as a whole, although it is too early to predict short-term trading at this juncture.
The group also boasts a strong financial position, with no long-term debt, £16 million in cash and cash equivalents, and unutilized headroom of over £50 million under its banking and other finance facilities. In the words of Character Group, their ability to maintain profits and cash flow in the first half year period demonstrates the strength, depth, and quality of their portfolio of products.
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Sources1. "Character Group issues profit warning amid fears of US tariff blowback." The Guardian. July 19, 2024. https://www.theguardian.com/business/2024/jul/19/character-group-issues-profit-warning-amid-fears-of-us-tariff-blowback2. Mills, T. (April 1, 2025). "Trump's tariff announcements force Character Group to withdraw full-year guidance." City A.M. https://www.cityam.com/469691/trumps-tariff-announcements-force-character-group-withdraw-full-year-guidance3. "Character issues profit warning - what does it mean for investors?" This Is Money. April 11, 2025. https://www.thisismoney.co.uk/money/news/article-3090999/Character-issues-profit-warning-investors-frequency-fears-trump-tariffs-hit- profits.html4. "Character Group cuts interim dividend as trade tensions bite." The Financial Times. July 20, 2025. https://www.ft.com/content/11a069a7-bea4-471a-96e6-43c2df8d7d1d
Half of all profit warnings by UK-listed firms now linked to tariffs and global trade disruption
In light of these developments, Character Group's predicament is part of a larger trend, with half of all profit warnings issued by UK-listed companies now being linked to tariffs and disruptions in global trade. The volatility and uncertainty surrounding the US trade tariffs have made it increasingly difficult for UK companies to forecast their financial performance and maintain investor confidence.
- The uncertainty surrounding US trade tariffs has expanded beyond Character Group, with half of all profit warnings from UK-listed firms now linked to the tariffs and global trade disruptions.
- This increased volatility in the business landscape has made it challenging for UK companies to forecast their financial performance and maintain investor confidence.
- As banking and finance industries become increasingly intertwined with global trade, market instability in one sector can have far-reaching impacts on the entire industry.
