HornbyToy firm Hornby has signalled progress in its attempts to recover from the woes caused by poor Olympics merchandise sales and supply chain problems.

While conditions are expected to remain tough for its model railways and Scalextric arms this year, Hornby said sales of more affordable Corgi and Airfix brands have held up well and have shown positive year-on-year growth.

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It added that the Chinese supplier at the centre of supply chain disruption last year was now expected to contribute to less than 15% of total production this year, down from 35% last year and 75% at its peak.

Remaining Olympics merchandise has also been discounted and sold after disappointing demand for London 2012 goods, which included model taxis and buses, contributed to a £541,000 loss in the six months to September.

Hornby has taken steps to broaden its portfolio of products to include more lower average price points and has been encouraged by the response to new products showcased at the recent London Toy Fair.

They included the Hornby E-Link, which provides a way to link a model railway layout with a home computer, and the launch of a new range of collectible Corgi cars based on Formula 1 teams.

The company said it should meet market expectations for full-year results to the end of March and said net debt has been reduced by £5.5 million last year to £3 million.

Andrew Wade, an analyst at Numis Securities, said his expectations that the company will break even in the year to March were unchanged. He added: "Encouraged that the supply chain issues and Olympics are now behind us, we believe 2013 will be a year of solid progress for the group."

Hornby announced in November that Roger Canham, who is chairman of Phoenix Asset Management, will replace Neil Johnson as chairman on Friday.

Mr Canham said: "I visited our suppliers in China early in January and believe that the strategy being pursued by the business will result in a much more robust product pipeline as 2013 progresses."

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