The era of budget travel stretched as far as model railways company Hornby yesterday after it revealed a new ‘lower-spec’ locomotive had proved a hit with custo- mers.
Reporting a 4 per cent rise in half-year UK sales, the Airfix and Corgi firm said its new Tornado loco appealed to hobby fans because it is a slightly less detailed product and available at a more competitive price.
The Tornado’s “very encouraging” performance helped Hornby offset lower sales of Scalextric, which has been impacted by retailers delaying the arrival of Christmas stock and tougher comparisons with trading a year ago.
Ahead of the all-important festive period, Hornby said underlying pre-tax profits for the six months to September rose 80 per cent to £1.2m. Turnover was £28.4m, an increase of 11 per cent on a year earlier.
Improvements in its supply chain, following difficulties in China, helped drive a major lift in sales in continental Europe, while Hornby has also seen growing demand for merchandise linked to the London Olympics. It said it was particularly encouraged by orders for its products from China, where interest in the London event is high following the Beijing Games.
The company added: “Over the course of the next 12 months the benefit of our London 2012 sales will help to cushion the group against challenges in the wider economic environment.”
Hornby also said it was pleased with the progress it has made in Germany, seen as the “largest and most discerning model railway market in Europe”. It added: “We are now demonstrating that our formula of developing products in Europe, and manufacturing in China, is capable of success across all the major European markets.”
Hornby said its operating margins had improved as it sold more model railway products in Europe.
In 2009, Hornby was awarded a licence to produce a range of official London 2012 merchandise across its Scalextric, Corgi, Hornby and Airfix brands, including models of London taxis and buses.
Despite the boost, Numis Securities analyst Andrew Wade cut his full-year profits forecast to £7m from £7.4m due to caution about Christmas spending. However, he added: “We remain confident that the boost of the Olympics and a strong product pipeline across Hornby’s brands will drive progress through the year to Match 2013.”
Hornby, whose founder invented Meccano construction toys early last century, kept its half year dividend at 1.7p, the same as last year.