Hornby's profits fall
Hornby, the model railway and Corgi toys maker, has cut its dividend after problems with a key supplier resulted in profits falling by a third last year,writes Nic Fildes.
The Margate-based company will pay out only 2.7p compared to 8.5p last year. The cut comes after Hornby reported its pre-tax profits were down almost 30 per cent to £6.3million.
Problems with a Chinese supplier combined with higher material costs and an adverse currency exchange rate put margins under pressure, even though sales grew by 11 per cent as demand for hobby materials remained strong.
Hornby, which also owns the Scalextric, Airfix and Corgi brands, said the company has benefited from the demise of Woolworths as it has forced more customers to go to independent retailers and department stores which carry more of the company’s stock.
Frank Martin, chief executive, said that between January and March the overall toy market declined 18 per cent – yet Hornby’s sales rose 13 per cent at the same time.