27th Jan 2009 07:00
Hornby Plc ("Hornby" or "the Company")
Interim Management Statement and Trading Update
Hornby is today issuing its regular update on trading and Interim Management Statement for the period from 1st October 2008 to date. This includes the important Christmas and January period.
Trading Update
Following more difficult trading conditions in the first half, the Company continued to experience cautious demand from its major retailers in the UK during the pre-Christmas period. Consumer demand remained muted during November and early December. However we are pleased to report that demand improved in the weeks immediately before Christmas. This continued immediately following Christmas and overall trading in December was significantly above the previous year. European demand was encouraging as our brands and new releases continued to be well received, although the performance continued to be constrained by supply issues.
Based on current orders on hand and expected deliveries over the coming weeks, the Company expects a strong finish to the financial year. However, sales lost in the Autumn and pre-Christmas period due to cautious demand from major retailers are now unlikely to be recovered. The trading result for the year is therefore expected to be at the lower end of analysts' expectations. Despite this the Company is in good financial health. We continue to operate within our banking facilities and we continue to enjoy an excellent relationship with our Bankers.
Supply Chain
We have reported previously on the difficulties experienced by our principal supplier in China. These difficulties came to a head during the Autumn period, and eventually resulted in the acquisition of that supplier by a well-resourced Hong Kong based company. During the period of uncertainty we remained closely engaged in the developing situation in order to reduce the risk of further disruption to supplies. The eventual outcome represents a stabilisation of our supply base and we have been encouraged by the positive relationship we are building with the new owners.
Strategy Update
The Airfix/ Humbrol and Corgi brands continue to show encouraging growth and provide a broader spread of lower price points as we operate in challenging trading conditions. The new product releases have been well received and we are making encouraging progress in re-invigorating the Corgi range. Customer feedback has been very positive and we anticipate a steady rebuilding of sales.
Outlook
As we enter the annual round of global toy and hobby trade fairs, our primary focus is on continuing to maximise our revenues across all markets. We have raised our prices in order to mitigate the effects of the weak pound and it appears that these increased prices will be accepted by the market. Our Dollar requirements for the rest of the current financial year are largely covered at more favourable exchange rates. However, unless Sterling strengthens from its current rate we would anticipate a material erosion to our margins in the year to 31 March 2010. We are considering a number of measures to mitigate such erosion including, if appropriate, further price increases later in the year.
Chairman, Neil Johnson commented:
"Our strategy of expansion in Europe and across additional hobby-based brands continues to provide a broader revenue and profit base.
" We are pleased with the performance of the Group in what was generally a difficult pre-Christmas period. Strong demand in the early weeks of 2009 gives us further confidence that our hobby-based businesses will continue to demonstrate their defensive characteristics in what is likely to continue to be a challenging economic climate."
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Date: 27th January 2009
For further information contact:
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Hornby Plc |
City Profile |
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Neil Johnson, Chairman |
Simon Courtenay |
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Frank Martin, Chief Executive |
William Attwell |
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Andrew Morris, Group Finance Director 01843-233500 |
020-7448-3244 |
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Web: www.hornby.com |
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