New CEO and an optimistic outlook at Kent's Hornby despite £2.9m pre-tax loss

By Sam Pither

28 November 2022

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WonderWorks is based in the old factory which became home to Hornby Hobbies in 1954

Despite posting a pre-tax loss of £2.9 million for the six months ended 30 September 2022, a strong order book and increases in direct sales are a positive sign for the future of Margate-based model railway manufacturer Hornby PLC.

Even with a 3 per cent rise in revenues (to £22.4 million) and an abatement of the supply chain issues which hit the group in 2021, increased overheads and high costs have seen the group’s £0.2 million net cash this time last year turn into a net debt of £4.9 million.

Although shipments from the firm’s factories are 40 per cent ahead of last year, cancelled sailings means it is still suffering from late departure dates and, despite container rates continuing to fall, they remain more expansive than before the pandemic.

So, while the increased speed of shipping goods from China to the UK has increased Hornby’s third party revenue by 7 per cent, capacity constraints for its manufacturing partners saw its international division revenues drop by 8 per cent.

However, the company notes its "order book is very strong and higher than a year ago". Furthermore, Hornby has invested in raising stock-levels before the Christmas trading period, an investment it is likely to see fruit from in its full year results as it avoids the supply-chain disruptions which took their toll last year.

Hornby has also revealed a year-on-year increase in direct sales of more than 50 per cent in the first two quarters of 2022/23, a trend which, if it continues into the final two quarters, will generate significant revenues in the full year trading report.

Lyndon Davies, Hornby Executive Chairman, said: "Revenues have marginally increased in the first half of a difficult 2022/23 trading period. A year ago, sales in the second half were held back by supply chain disruption, but we are now in a stronger position, having taken strategic decisions to raise stocks to support sales and avoid shortages.

“As we are heading into our key Christmas trading period it is hard to predict the outcome for the full year results, but we are well-placed, with our order book very strong and higher than it was a year ago."

The firm has also appointed Paperchase CEO Olly Raeburn as its new CEO from 23 January 2023. Joining the stationary retailer as Chief Marketing Officer in June 2019, he led the business through an administration and oversaw the turnaround strategy which led to its successful sale in August of 2020, becoming Paperchase's CEO in September of the same year.

Olly's appointment will see Executive Chairman Lyndon Davies move to non-executive chair.

He said: "I'm enormously excited about the prospect of working in a business with such a rich British heritage, and an iconic set of brands. It is a wonderful business with some great opportunities to build upon, across the board, and I'm really looking forward to setting off on this journey

Featured image: Hornby

By Sam Pither

Sam is the Regional Editor of Biz News, responsible for both Hampshire and Dorset.

A new recruit to journalism, Sam started writing for the Business Magazine as a freelancer in May of 2022 after completing his degree in English at University College London. His passion for local businesses and ability to tell a story soon caught the attention of the publication’s management team and have led to his meteoric rise.

Sam, who lives in central Reading, takes a particular interest in technology, gaming and food and drink, having been a chef before starting his degree.