Chinese supplier and the weak pound derail Hornby

Announcing its financial results today (5 June) for the year ended 31 March, the international hobby products group said it had been a challenging year and it was now standing by to dump its Chinese supplier in favour of a replacement if the need arose. Chairman Neil Johnson said that supply chain issues at Hornby’s largest supplier – now owned by Hong Kong-based Sanda Kan – had again constrained sales of model railways, mainly in Continental Europe. Although Hornby continued to work closely with them to resolve the supply issues, it had been building relationships with potential alternative suppliers of model railway products and were “now in a position to transfer a substantial proportion of our requirements away from Sanda Kan, should this become necessary”. Chief executive Frank Martin said: “As a result of the weak pound and continuing supply chain issues, our profits and margins have come under pressure. As a result, the Board thinks it prudent not to pay a final dividend. This is a decision that will enable us to strengthen an already healthy balance sheet. Our supply chain issues are a source of frustration but we remain committed to and are making progress towards the implementation of a satisfactory solution.” Elsewhere, the group continued to explore new ways of extending its products and had recently signed an exclusive worldwide license agreement with the Brawn GP Formula One team. Further, it had signed agreements with Disney Productions for the blockbuster movie series ‘Cars’ and had also agreed an extension of the James Bond 007 licence to cover its Corgi ranges. Sales for the year were up 11% to £61.6 million (2008: £55.7m) while pre tax profit fell to £6.1 million (2008: £9m).