Hornby sticks to full year guidance
Struggling model maker Hornby said sales for the financial year to date remain below the same period last year, as reported in it interim results, but in line with expectations.
In November Hornby said it would scrap its dividend following weak half-year results and said it would "approximately break-even" for the financial year after supply chain disruption at one of its largest suppliers in China.
Underlying pre-tax profits for the year to March 31st 2013 is also expected to be in line with expectations.
Commenting on action taken to mitigate the effects of the supplier causing disruption to its model railway supplies, Hornby said it is now expected to contribute less than 15% of total production in 2013 compared to 35% earlier in 2012.
"Despite general weakness in demand, sales of the Corgi and Airfix brands have held up well and shown positive year on year growth," it explained.
The group said its remaining London 2012 merchandise has been discounted and the majority has now been sold.
Looking ahead, the model train maker said it remains confident in the group's strategy.
"We recognise that trading conditions in the UK and the rest of Europe continue to be challenging for the foreseeable future. This may constrain sales of our higher ticket Hornby and Scalextric items. However particularly in continental Europe, demand for our model railway products continues to be strong."
Incoming Chairman Roger Canham commented: “We are on the way to dealing with the headwinds highlighted in previous trading statements, not least the supply chain challenges. I visited our suppliers in China early in January and believe that the strategy being pursued by the business will result in a much more robust product pipeline as 2013 progresses."
"Despite weak consumer spending in our traditional markets, the continuing innovation amongst the core brands, such as the Quickbuild launch and Railmaster app, will place Hornby in a strong position," he added.
As previously announced, Roger Canham will take over from current Chairman Neil Johnson who will retire at the start of February 2013. Nick Stone will be appointed Finance Director after Andrew Morris leaves in February.
Hornby said it continues to operate within its banking covenants, which were revised to provide more operational flexibility in December 2012.
Net debt as at December 31st 2012 was £3m, down from £5.5m last year.