Model railways group Hornby sees profits stay on track
British model railways group Hornby kept profits rolling ahead today after benefiting from its push into new European markets.
Hornby said profits rose 8% to £8.2m (€11.9m) in the year to March 31, following the targeting of markets in Germany, Italy, Spain and France and the launch of digital systems for its Scalextric car racing arm.
The company, which has a market value of £87m (€127m), has also boosted profitability by transferring production to low-cost operations in China.
The performance of European acquisitions, which have included the Lima group in Italy, enabled Hornby to offset challenging trading conditions in the UK.
It took early action to lower costs in the UK and then benefited from a strong start to this year as new products came into shops.
As a result Hornby told investors in April that profits would be stronger than the £7.3m (€10.6m) pencilled in by analysts ahead of the results. It is the seventh consecutive year of profits growth.
Chairman Neil Johnson said prospects remained bright, with renewed interest in model railways and slot car racing helping to offset weak retail markets.
He added: “We expect trading in the UK market to be challenging again in the new financial year.
“However, the overseas subsidiaries are all now extremely well placed to become the main drivers of growth in the business during the coming years.”
He pointed out that the UK market for model railways represented only 10% of the total European market and that operators on the continent had been in difficulty because of their reliance on European manufacturing.
That presented Hornby with an opportunity three years ago as it began buying strong brands with the intention of relocating operations to China.
