The group said it experienced "significant growth" in its UK market in the run-up to Christmas, while demand for its European brands was also strong.

Order intake and sales for the final quarter of its financial year - covering the period from January to March - are also expected to beat the strong levels experienced last year, the company added.

Chairman Neil Johnson said: "A strong finish to 2007 shows once again that Hornby is extremely resilient in times of economic uncertainty."

Hornby said it was confident that Scalextric products based on the Mercedes McLaren team and its driver Lewis Hamilton will continue to do well. It has also secured the licence for a range of products based on the forthcoming James Bond movie, Quantum of Solace.

Meanwhile, the relaunch and development of its Airfix and Humbrol brands - acquired out of administration in 2006 - is well under way.

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The firm recently posted interim pre-tax profits up 44 per cent to £2.6 million, helped by a sales boost for Scalextric following the success of Lewis Hamilton.

The company has also increased its activity in continental Europe in recent years, following the acquisition of businesses in Spain, Italy, France and Germany. However, it said that the rate of new product introduction required to meet market demand in Europe had placed additional strain on its supply chain.

It said that steps were being taken to strengthen the management and manufacturing resources available to the company.