Full steam ahead at Hornby with 80% profits rise

Toy manufacturer Hornby must be chuffed. The model railway maker and manufacturer of the Scalextric and Airfix kits has posted an 80% jump in first-half pretax earnings to £10.8m.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
Hornby has bounced back from the poor showing of the 2010-11 financial year. Six months ago, pretax profits were down 20% and sales had seen a 1% drop. Chairman Neil Johnson promised that a turnaround in fortunes was imminent – but then chairmen often do. Except, this time, his Mystic Meg-style predictions all came true: ‘We have now established the platform [geddit?] from which we can drive significant growth. Whilst demand for our products has remained strong across all our major markets, supply chain issues have constrained our sales. We have taken steps with our largest supplier and with new suppliers to address this issue.’

These steps have paid off tenfold. After Hornby’s main supplier in China failed to produce the volumes required last year, the firm 'diversified risk in its supply chain'. We think that means it 'signed up more suppliers'. The increased output tallied nicely with a sudden urge to splurge on model train sets across the continent: cash-strapped Europeans buying nostalgic toys from their halcyon days of youth, p’raps?

European revenues are up 50% with Germany leading the way as ‘by far the largest and most discerning model railway market in Europe’ gushes Hornby. Of course, they are not the only ones sucking up to the Germans right now. It's the country with all the cash! UK retailers have been more cautious, increasing sales by just 4%. Hornby’s half-year turnover is up 11% overall to £28.4m.

Hornby’s not done yet either. A whole range of 2012 Olympics-inspired products is set to generate around £6m of sales in 2012. And Hornby is also ramping up its international expansion: ‘The real growth opportunity should arise from overseas sales,’ was the firm’s statement today. ‘However, the eurozone crisis could slow growth down.’ Never a truer word: you have to have a currency in order to spend it.

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