Sparks - Games Workshop Group

FY25 was a great year for Games Workshop Group with overall revenue growth of c 17% to £617.5m (c 20% at constant currency) and c 29% growth in PBT to £262.8m. In the May trading update, management indicated that PBT would be not less than £255m, which was about 6% ahead of our estimate at the time. Foreign currency translation was negative for both revenue and profit in the year.

It was a strong year for core revenue, which increased by c 16% in constant currency terms, following strong growth in the prior year, and was at the top end of management’s operational plans. Licensing’s performance was exceptional, increasing by almost 80% in constant currency terms, due in part to the surprise success of Space Marine 2.

The core revenue growth translated into a good increase in the core operating margin to 37.5%, with constant currency growth of c 26%.

Management has quantified the potential impact of US tariffs for the first time. It highlights that if it did nothing, the tariffs would reduce PBT in the coming year by £12m. Management sees a 2% impact on gross margin, but this would be offset by an efficiency plan that may take longer than a year.

With respect to the outlook for the year, there is limited commentary on key product releases beyond focusing on more Warhammer 40K games and looking for licensing partners for Age of Sigmar. Management says it is focused on delivering operational plans and working to overcome any obstacles that may arise. The strong performance of Licensing in FY25, which has a high operating margin of more than 90%, provides a tough comparative for FY26 and one that management believes will be difficult to match.

Along with the results, management has declared a second dividend for the current financial year of 55p per share, which takes the year to date total to 140p per share.