It made £3.5 million on sales of London 2012 goods such as model taxis and buses, but margins were weaker than expected and after provisions to cover unsold stock it slid to a £541,000 loss in the six months to September.
The Margate-based firm admitted it was battling against significant short-term challenges as the Olympics blow added to supply-chain woes and poor consumer demand. UK sales lifted by 3% in the half-year but plunged by 15% with Olympics sales stripped out.
Hornby, which makes model railways, Scalextric racing cars and also owns the Airfix and Corgi brands, said conditions were likely to be weak in the current half-year as retailers remain cautious on order intake. It axed its interim dividend and said payments would only resume once performance improved. Shares fell 2%, having plunged by around 60% over the past year.
Outgoing chairman Neil Johnson said: "While we face some significant short-term challenges, we are working hard to address these."
The group is now focusing efforts on addressing supply-chain problems after one of its main manufacturers announced it was rationalising its facilities.