News Column

Hornby Widens Annual Loss As Revenues Fall

June 27, 2014

Rowena Harris-Doughty

LONDON (Alliance News) - Hobby and toy products producer Hornby PLC Friday said its losses widened in its last financial year, as revenues fell both in the UK and in Europe.

Hornby owns a number of model railway and slot car brands including Scalextric, Airfix models, Humbrol paints and Corgi die cast models.

The company posted a pretax loss of GBP4.6 million for the year ended March 31, compared with a loss of GBP3.4 million a year earlier, as revenues fell and operating expenses increased.

Revenues in the year fell to GBP51.4 million, down 10% from the GBP57.4 million in revenues reported the prior year. Like-for-like revenues, excluding revenues generating from the London 2012 Olympics, were down 2%.

The company said it increased its gross profit margin in the year, largely as a result of the heavy discounting on London 2012 stock in the previous year.

"The availability and supply of high end model rail products with higher margins is still well below planned levels. Therefore the overall margin is still suppressed when compared to historic levels," Hornby said in its statement.

Hornby said that trading conditions in its UK home market were hit by its largest single customer going into administration, while its continental Europe businesses were also saw sales decline during the year.

"Our subsidiaries have again sustained the most detrimental overall impact to sales as a result of the supply chain disruption as the relative proportion of model railway sales in their businesses is higher," the company said.

It said that Scalextric sales were buoyed by its popular set "Demolition Derby", while sales of Airfix were also positive.

The company said sales of its Hornby model railways declined as it "wrestled with getting production capability out of the incumbent supplier."

"This has been another year in which trading has been challenging and therefore the decision has been taken not to pay a dividend," the company added.

The company did not pay a dividend the year before.

Hornby shares were up 1.2% at 77.40 pence Friday morning.

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Source: Alliance News

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