TOY firm Hornby vowed to deliver an improvement in its performance today after racking up losses of £1.2m during the last financial year.
The Margate-based group, whose brands also include Airfix, Scalextric and Corgi, said the deficit for the year to the end of last month will be £200,000 more than expected because of foreign exchange losses.
The company’s troubles stem from supply chain woes involving a major model railway manufacturer in China, but with those ties due to be cut from July it expects a “gradual improvement” in its reliability and quality this year.
It said trading in recent weeks has been in line with expectations and that it broke even in the year to March 31 when excluding the foreign exchange impact, which relates to the value of currency held to purchase its products.
Net debt has risen to around £7.3mi from £6.5m at the end of December, with the outcome of talks with lenders over new banking facilities due to be revealed at the time of full-year results in June.
Former Ladbrokes and Dixons director Richard Ames is due to join the group as its new chief executive later this month.
The company said: “Richard has a wealth of experience and we look forward to him leading the group and driving Hornby’s future performance.
“The group’s plans for the new financial year are well advanced and with the main obstacle to an improved and efficient supply chain out of the way, we expect a gradual improvement in its reliability and quality.
“As a result we look forward to improved trading next year.”
The firm was first left with a supply squeeze in 2012 after its then biggest manufacturer shut a factory producing the group’s model railways in a year that also saw it suffer slower-than-expected demand for Olympic-themed products.
It has since been broadening its supplier base, moving production to other Chinese firms as well as those in India and bringing some manufacturing back to Britain.
The firm said recently that it agreed to pay the supplier £600,000 as part of a ‘’managed exit’’, which it hopes will put the production difficulties behind it.