Hornby swings to full-year loss

Model train set maker Hornby said on Thursday that it swung to a full-year loss, as it pointed to disappointing sales during the key October to December period.

In the year to the end of March 2023, the company swung to a reported pre-tax loss of £5.9m from a profit of £600,000 a year earlier even as revenue grew 2.5% to £55.1m.

"The year started well, but in the most important trading period October- December the sales were very disappointing and did not hit the levels that had been forecasted just a few months earlier," it said.

"The UK economy struggled in 2022, with growth slowing and inflation rising. The war in Ukraine caused energy prices to rise sharply, which put a squeeze on households who were facing higher costs and uncertainty. Our own prices rose as factory costs increased, these were passed on to our customers."

Hornby said that against this background, its manufacturing was at the highest level ever and it closed the year with stocks of £21.3m, up 29%. "These increased stocks put a squeeze on cash," it said.

Gross debt surged to £6.9m from £0.3m a year earlier. This was attributed in part to an over-commitment to stock derived from an expectation that the top line revenue growth trajectory would have continued to follow that of recent years.

At 0930 BST, the shares were down 12% at 19.90p.