A model train company saw turnover soar by a fifth to Pounds 15m last year following the takeover of a rival manufacturer.

Bachmann Europe, of Barwell, said the sales boost was "encouraging" - but warned there were signs that revenue could be hit this year by continuing uncertainty in the global marketplace.

Although sales in the UK, which make up 70% of turnover, continue to be strong, orders from some countries such as Greece and Germany have begun to dry up.

The business, which manufactures products for the top 10 model train brands, is being to forced to increase its prices by 3% from March 1 because of the rising costs of raw materials and labour at factories in China.

Graham Hubbard, managing director of the company, said: "At the minute, we're being very cautious about making any kind of predictions about how we'll be doing this year. We are doing well, don't get me wrong, but we don't want to make any big guesses on how much we will make this year.

"It's a very unpredictable market at the minute and we just don't know what's around the corner.

"We were more confident last year, but the information we're getting back from our distributors around the world suggests things aren't as rosy as we'd hoped."

He said that although the business had been mostly immune to recession, because people "continue to spend money on entertainment when times are hard", there were signs that some enthusiasts may not spending as much as they used to on their hobbies.

He said: "People will always want to spend on their leisure and we're still seeing that, but perhaps people aren't as spendthrift as they were before. In Germany we've actually lost
embroidered patches money this year.

"Sales in South Africa are reasonable but it's very up and down in Australia and New Zealand."

The company supplies about 80% of the world's model train market after its takeover of Chinese toy maker Sanda Kan last year.

Bosses say the acquisition will allow it to boost capacity as in the past, Bachmann was unable to meet demand and had been left with potential orders worth up to Pounds 2.5m which it could not meet.

Bachmann and other divisions of parent business Kader Holdings chipped in millions of pounds to buy Sanda Kan, which manufacturers a significant proportion of trains sold in the UK by model train brand Hornby. Bachmann trains are designed by a team in Barwell before they are made in China.