These half-year results from model train maker Hornby should reassure investors that the company remains on track with its turnaround plan. The group moved back into the black, reporting an underlying operating profit of £0.25m, following a £0.85m loss last year.
The improved performance can be attributed to higher sales and lower overheads. Sales of model rail products soared 18 per cent, triggered by the launch of new ranges in the UK and Europe. Scalextric, Airfix and diecast collectibles, such as Corgi and Pocher, also thrived, with sales up 7 per cent, 4 per cent and 8 per cent respectively.
Operationally, Hornby is making serious progress with stock management and logistics. With minimal disruption, it moved into a state-of-the-art UK warehouse and has embarked on an "enterprise resource planning" project. The aim here is to make Hornby better at managing stock, resources and finances across the group, with all subsidiaries integrated onto one system. A new London office is now housing Hornby's growing e-commerce team, while the website moved to a fresh platform. Quality control and production scheduling remain challenges, but progress has been made: there is already better visibility on supply and delivery times.
Numis Securities expects pre-tax profits of £1.5m for the full year, giving EPS of 3p. That compares with losses of £1.1m and 2.1p last year.
| HORNBY (HRN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 75p | MARKET VALUE: | £29.4m | |
| TOUCH: | 73-78p | 12-MONTH HIGH: | 87p | LOW: 59p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 79p* | NET DEBT: | 35% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 22.5 | -1.1 | -2.6 | nil |
| 2014 | 24.2 | -0.5 | -1.3 | nil |
| % change | +8 | - | - | - |
Ex-div: na Payment: na *Includes intangible assets of £11.8m, or 30p a share | ||||
