Another year of subdued trading saw toy manufacturer Hornby scale back its dividend to meet its policy of paying out 50 per cent of earnings. Underlying profits were flat at £4.5m, held back by tough Christmas trading in the UK. But demand for Olympic merchandise is rising steadily and, with the improved supply chain translating into steady recovery in Europe, the shares look too lowly rated.
While UK profits hit the buffers, down a quarter to £3.4m as sales slipped 3.8 per cent as a result of lower Scalextric sales, European sales climbed 21 per cent to £16.2m, turning a £0.2m loss in 2011 into a £1m profit. And Hornby is confident that new award-winning Star Wars ranges and a 50th anniversary James Bond range can help it restore Scalextric volumes. Moreover, while sales of London 2012 merchandise is gaining momentum - management expects Olympic sales to hit £7m this year - Hornby is more excited at the longer-term prospects that the license has brought, opening up new retail channels such as Tesco and WH Smith.
Broker Numis Securities expects underlying pre-tax profit of £6.2m for 2013, giving EPS of 11.7p (9.6p in 2012).
HORNBY (HRN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 77p | MARKET VALUE: | £29.6m | |
| TOUCH: | 76-81p | 12-MONTH HIGH: | 153p | LOW: 73p |
| DIVIDEND YIELD: | 4.8% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 102p* | NET DEBT: | 16% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 55.7 | 9.02 | 16.2 | 8.50 |
| 2009 | 61.6 | 6.12 | 11.2 | 2.70 |
| 2010 | 63.9 | 5.22 | 9.76 | 5.00 |
| 2011 | 63.4 | 4.13 | 7.50 | 5.00 |
| 2012 | 64.4 | 3.99 | 8.19 | 3.70 |
| % change | +2 | -3 | +9 | -26 |
Ex-div: 21 Nov Payment: 21 Dec *Includes intangible assets of £17.4m, or 45p a share | ||||
