Hornby (www.hornby.com), which moved earlier this year from Margate to the Kent Discovery Centre in Sandwich, has issued its second profits warning in two months after problems at the model maker’s European business affected group sales.

The group said it expects to report a £2 million underlying pre-tax loss in its current financial year, although the loss “could be lower than this”, depending on how long it takes its international division to recover.

Chief executive Richard Ames said: “The performance of our UK business since modernising the distribution set-up has been very encouraging, demonstrating that the strategy to turn Hornby around is working.

“Buoyed by the recent improvement in our UK performance, we have now taken the decision to accelerate the re-organisation of our European businesses.

“While this will impact upon this year’s performance, we will be unlocking significant year-on-year cost savings, and the board is confident that the accelerated plan will leave us very well placed by the end of the financial year.”