Pre-tax profits fell from £9m to £6.1m in the year to March. Sales rose from £55.7m to £61.6m.
"This has been a challenging year for Hornby," said a group statement. "As a result of the weak pound and continuing supply chain issues, our profits and margins have come under pressure. As a result, the board thinks it prudent not to pay a final dividend. This is a decision that will enable us to strengthen an already healthy balance sheet."
In more positive news the firm has unveiled a deal with the Brawn Formula One racing team, current leader of the constructor's championship.
Airfix and Humbrol sales continued to show good growth and the bulk of Corgi sales were made in the second half. Supply chain issues during the year related to our largest supplier once again constrained sales of model railways, mainly in Continental Europe.
"The diversity of our products across the Group continues to impress and attract customers. We are a broadly-based hobby business and the continued demand for our products proves our resilience in times of recession."