UK return as Hornby hit by losses

The maker of Airfix, Scalextric and Corgi models posted pre-tax losses of £3.4m in the year to the end of March from £4m profits a year earlier after “disappointing” sales of London 2012 merchandise and problems with Chinese suppliers.

But the company insisted it was in a “strong position to face the future” as it bolsters its supply chain and cuts costs by axing its dividend.

Hornby, which traces its roots back to the start of the 20th century with the launch of Meccano building toys, plans to make a new range of Airfix Quickbuild model kits in Sussex, and also recently returned some of its Humbrol paint production back to the UK.

Executive chairman Roger Canham said: “We are looking very carefully at costs, and also it’s about quality of product and speed to market. It’s the total picture we look at and not just the bottom line.”

The bulk of the company’s products are made by external suppliers in India and China, but Mr Canham said it plans to lift domestic production to around 10 per cent. Hornby is also shifting more work to India.

Hornby’s supplies were squeezed during the year when its biggest manufacturer in China shut a factory supplying its model railways. Mr Canham said it was also hurt by a 15 per cent increase in China’s minimum wage.

Turnover slumped to £57.4m from £64.4m as the supply squeeze added to tough markets.