Aardman, the studio behind Wallace and Gromit, fell into the red during 2023, it has been revealed.
The Bristol-headquartered business has reported a pre-tax loss of £550,135 for its latest financial year.
The loss comes after the studio posted a pre-tax profit of £1.5m in 2022.
Aardman said it fell to a pre-tax loss because of an “accounting adjustment” relating to an impairment of unrecouped costs on the Lloyd of the Flies’ series.
The company said that without the adjustment, it would have made a pre-tax profit of £1.6m.
Newly-filed accounts with Companies House also show its turnover dipped from £31.7m to £26.7m over the same period.
The studio released Chicken Run: Dawn of the Nugget in December 2023 while the film Wallace and Gromit: Vengeance Most Foul was in production.
A second season of Very Small Creatures was also completed and a seventh season of Shaun the Sheep was greenlit.
Costs rise again for Shaun the Sheep maker Aardman
Aardman added that its overhead costs increased significantly compared to 2022 and were the highest on record.
It said this was mainly due to rises in labour costs due to pay increments, a higher headcount and lower charging of staff time to jobs in production.
There was also large increase in energy costs, rent, depreciation, IT and general repairs, the studio added.
A statement signed off by the board said: “The directors set a rolling five-year plan and budget and are confident of achieving overall forecast financial performance across the period in carrying out its principal activities.”
Aardman’s UK turnover rose from £9.6m to £10.3m in the year and from £3.3m to £3.4m in the European Union.
In the US, however, its turnover fell from £16.9m to £11m. In the rest of the world, it increased from £1.8m to £1.8m.