UK - Digital switchover helps Hornby push sales up

[John Ashworth]

Digital switchover helps Hornby push sales up 37%

* Julia Kollewe
* guardian.co.uk,
* Friday June 6 2008

Strong sales of digital Scalextric and train sets have helped boost model-maker Hornby's annual profits by 17%.

Despite recent delays in product shipments and "challenging" market conditions, the firm was upbeat about its future this morning following the recent acquisition of Corgi.

It said that sales were up 37% in the first half of the last financial year, with its digital systems proving "very popular".

But sales growth slowed to just 7% in the second half of the year. This was partly due to delays in shipping model railway sets to its European subsidiaries - which Hornby warned in March would knock profits below market expectations - and some weakening in UK demand.

Thanks to the strong first half, profits before tax climbed to £9m in the year to March 31, from £7.7m the year before.

Hornby's digital Scalextric slot car racing sets showed strong year-on-year growth, while the digital Virgin Trains Pendolino brought in the most revenues among the model railway set ranges. Hornby expects the model market to continue to shift towards the digital format.

In America, Hornby sales were slighly down at $5.4m (£2.76m) compared with $5.6m the year before.

Hornby's pipeline of new products includes James Bond-themed Scalextric sets, to be launched alongside the next James Bond movie, Quantum of Solace, in the autumn.

Hornby recently added Corgi, the iconic die-cast model brand, to its collection of British toy brands. It hopes to restore Corgi, which had been starved of investment under US ownership, to its former glory.

The company also owns Airfix model planes and Humbrol paints, acquired in November 2006, whose performance has exceeded its expectations.

The shares edged down 1p to 174p in early trading.

[Kevin Wilson-Smith]

Good - I hope they come right!