TOY company Funtastic is shifting its focus towards international markets due to the persistent weakness of the Australian retail sector.
Chief executive Stewart Downs said sales of Funtastic products declined in Australia in the year to end of July, but international sales were up sharply.
"We've come to a view that things will remain challenging (in Australia) for the forseeable future and for us to have growth it will come from doing business outside of Australia," he told AAP.
"We've seen an almost doubling of our international business year on year and we expect a strong trend going forward."
Funtastic has been moving away from its sole focus of distributing toys and confectionary produced elsewhere, to manufacturing products to be exported across the globe.
Mr Downs said the company had achieved great success so far with its Chill Factor Slushy Maker, which was launched during the European winter, selling 2.4 million units as of May.
The company has sold 40,000 units in Australia since launching the product a month ago.
Funtastic hopes to repeat the success with the release of an ice cream maker later this year.
In addition to the Chill Factor, Funtastic produces Pillow Pets soft toys, QuickSmart baby products and pool products Floaties.
It also holds the Australian distribution rights to a wide range of toys, including Disney, Ben 10 and Lego Stationary.
The company made a profit of $13.96 million in the year to July 31, up 34 per cent on the previous year.
Most of the profit increase was linked to a $3.3 million gain made from a renegotiation of the amount it paid for a license to manufacture and distribute certain Lego stationery products.
Excluding that one-off gain, earnings were $20.7 million, up slightly from $20.2 million in the previous year.
"There is only a slight growth but for us its our second year of sustainable earnings," Mr Downs said.
"We think it's a strong result given the difficult conditions that exist within Australia."
Funtastic has also paid a total dividend of one cent for the year, the first time it has paid dividends since 2006.
Mr Downs said he was confident the company will continue to return money to shareholders over the coming years.
Funtastic shares were up one cent at 15.5 cents at 1504 AEST.
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