British toy firm Hornby warned over profits today after the Olympics proved a flop for sales of its London 2012 branded goods.

The group had hoped sales of its merchandise would drive a bounce back in profits.

But it admitted that demand for London 2012 items - such as model taxis and buses - had been lower than expected.

Faced also with major disruption to one of its largest suppliers in China, Hornby said it is now expecting to break even in this financial year.

The group - which makes model railways, Scalextric racing cars and also owns the Airfix and Corgi brands - has been hit by weak consumer spending amid the recession and saw profits fall from £4.5m sterling to £3.4m in the year to March 31.