16th Sep 2015 07:00
LONDON (Alliance News) - Hornby PLC Wednesday said that revenue in the first half of its financial year will be lower than the prior year due to trading disruption and supply problems, but said that despite this its full-year results will show progress on the year before.
The hobby products company, known for its miniature train sets, said that the implementation of a new enterprise resource planning system in the UK hit trading in July and August, against a backdrop of a weaker general retail environment, while European sales are currently suffering from ongoing problems with the supply of international model rail products.
This will lead to an overall fall in revenue in the first half, Hornby said, although it added that run rate volumes in the UK have now improved since the trading disruption and are back to levels which are higher than last year. UK trading is also now benefiting from manufacturing production being ahead of plan in trains and Scalextric, so UK revenue at the half year should show modest growth.
"While it is difficult to forecast accurately the full extent of further expected disruption during the ongoing roll-out we are confident that the full year financial result will show progress on last year," the company said.
Meanwhile, Hornby said that it is working hard to overcome the supply issues in Europe and is confident that supplies of the products will improve in time. The roll-out of the ERM system in Europe is scheduled to start in October with completion expected by the end of the financial year. The upgraded system will enable delivery of "very significant" cost savings and wider operational benefits, Hornby said, including simplification of the supply chain and a focus on sales generation.
"The group is now looking ahead to the important Christmas trading period. Early indications from our customers are positive and we have an exciting pipeline of new products that are being well received. Despite the challenges of managing the group's planned turnaround strategy, we are confident that Hornby will emerge as a stronger and more robust business," Chief Executive Richard Ames said in a statement.
Hornby is holding its AGM later on Wednesday and will release its half-year results on November 26.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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