Bob aims to build a presence in China

Hit Entertainment attempted to quell fears about its exposure to the US retail market yesterday, saying that its portfolio of children's characters was allowing it to ride out the tough conditions.

The company also revealed that it is looking to take its creations, which include Bob the Builder and Thomas the Tank Engine, to China. Reporting interim results, Rob Lawes, chief executive, said he will make his first trip to China in the next few weeks to speak to local broadcasters, retailers and toy companies.

"That market [China] is really opening up. It's a territory that we haven't even touched and that's very exciting," Mr Lawes said.

He said Hit's assets had transferred well into other cultures, such as Japan, where Thomas has been "phenomenally successful". The company aims to be in China by the middle of next year.

Analysts yesterday focused on the US retail environment, which provides two thirds of revenues. The company said it was "tough" but it had shown "resilience" and January and February this year were better than expected. The company makes 93 per cent of its sales from selling toys and videos based on its characters. Richard Menzies-Gow, analyst at Dresdner Kleinwort Wasserstein, said: "People were nervous about the US. While things are obviously tough, they are not now dependent on one or two products."

Hit shares closed up 5 per cent at 201.5p. The company's revenues, boosted by the acquisitions of Barney the Dinosaur and Thomas, climbed 63 per cent to £96.2m for the six months to 31 January, an underlying increase of 16 per cent. Pre-tax profit, before exceptionals and goodwill, rose 67 per cent to £25.5m. There was slower growth for Barney in the US and for Thomas in the UK but analysts said this was expected.

Simon Lapthorne, of Arbuthnot Securities, said: "They are being quite careful about how they manage [characters] for the long term, rather than flog them to death over a short period."