Troubled Hornby showing signs of life

TROUBLED Hornby is showing early signs of recovery after completing the first stage of its turnaround plan. The Kent-based model train maker has been aiming to create a smaller and more focused business after struggling with falling sales.

The firm, which also owns Scalextric, issued a string of profit warnings last year after difficulties at its Chinese suppliers, which badly disrupted its ability to deliver to customers.

It has since embarked on a painful turnaround programme, reducing product ranges and cutting back on investment to shore up the balance sheet. The cutbacks have been beneficial with Hornby yesterday revealing sales in its fourth quarter had shown an ‘improving trend’. It had a net cash on the balance sheet of £1.1m at the end of March this year, versus a net debt of £7.2m in March the year before.

Steve Cooke, chief executive, said: ‘I am pleased to report that the first stage of our turnaround plan has been successful and this provides a strong base from which Hornby can build.’

However, Neil Wilson, senior market analyst at ETX Capital, questioned whether the group would be able to keep up its momentum amid falling demand. He said: ‘Model train sets are not the source of pride and envy among kids they once were. Chugging along managing a slow and steady decline may be all that Hornby can hope for.’

Shares soared 7.3pc, or 2.25p, yesterday to 33p.