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Hornby Make a Profit


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11 hours ago, APOLLO said:

“Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness.
Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”


― Charles Dickens, David Copperfield

 

Brit15

He says nothing of the millions in carry-over debt though. ;)

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12 hours ago, phil-b259 said:

 

A modest profit is still better than yet another massive loss though - particularly given the amount of debit Hornby have on their books.

 

Whether it will continue to improve is of course open to question

I agree with the sentiment, although you’d be more pleased with Oxford’s bottom line than Hornby’s given respective sales. 
 

One thing though (I know I keep saying this as I think it’s important to bust the myth) - a line from the results:

 

Borrowings in the year ended 31 March 2021 were zero.

 

though they are paying 1% on a £9m indrawn facility... and some way to go to recover the £15.5m of accumulated losses

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Posted (edited)
2 hours ago, Blandford1969 said:

They must be the most profitable railway company in the country..... I'll get my hat.

 

£300k on £48m is nothing to be proud about... if you do the math, its £1 profit on a £160 loco.


This is year 3 of the “new team”, and an exceptional year loaded in their favour, the 100 year anniversary range,  covid wont last forever.. I was expecting exceptional results.

 

In 2020 they clearly fired the big fireworks, but only seem to have a few sparks in the sky to show for it.

 

Given the years of restructuring and an exceptional years trading conditions.. that couldnt make things much better for them... I was expecting to see out paced performance that blows the lid off their past years, a real one off demon slaying event, that said they grasped the oppourtunity gifted to them... what I saw we got was...., business as usual, trending out of the hole they were in.

 

but having fired off the big guns in 2020, is the gunnery empty ?

 

So what is to be expected in a post-covid year, where stock supply seems to be a hot topic of conversation, when year 101 doesnt mean much, where 3 large customers no longer sell Hornby, and where following a bumper leap in sales,and the next question is restocking inventory and maintaining or growing those sales.

 

spend that £300k wisely...

 

This tooling is starting its 6th decade...

https://uk.Hornby.com/products/Hornby-lgbt-pride-wagon-r60061

Yet for each one sold, it seems there was still only 10p profit in last years accounts.

 

i’m left hoping the best has been saved for 2021’s results.

 

 

 

 

 

 

Edited by adb968008
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Is this a current profit, actually available in Hornby's bank account, or an announcement of a profit that can be pre-ordered for delivery estimated to be Q4 2025? ;)

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14 hours ago, 1andrew1 said:

 

What's impressive about Hornby's results is their sales growth in contrast to Kader/Bachmann's sales decline. That company still remains loss-making but I appreciate it also has manufacturing and small property arms.

https://www.kader.com.hk/investor_relations/financial_reports.html

 

On another note, tucked away in Section 11 of Hornby's results is a snippett about the results from 49%-owned associate company LCD (Oxford Diecast incl Oxford Rail).

It shows revenues for year ending 31 March 2021 fell  27%to £2.2m from £3.0m whilst profit after tax rose more than 200% to £223k from £70k.

https://polaris.brighterir.com/public/Hornby/news/rns/story/w047m8x

Not a real comparison alas.   Kader suffered a massive sales decline in model trains in the USA which overall accounted for  a very large part of their model trains sales decline.  But that is purely in respect of model trains.  Hornby's overall results are not split by brand and while it is almost certain that their model trains sales figure increased we don't know how much of the profit has come from that.  And anyone in the trade will tell you there was a massive increase in the sales of plastic kits as a consequence of the pandemic and lockdowns

 

And surely the fact that Hornby are now apparently diverting more model railway sales to their direct channel instead of via certain big retailers would seem to indicate that internally they have a concern to increase revenue and profit from the model railway part of the business. - why would they be doing that for any other reason?

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4 minutes ago, PatB said:

Is this a current profit, actually available in Hornby's bank account, or an announcement of a profit that can be pre-ordered for delivery estimated to be Q4 2025? ;)

You can only pre-order if your shares are in Tier 1 ;)

 

Interestingly I see the RNS doesn't mention Net debt but it should not be overlooked that Hornby are approaching the end of a very significant loan facility which is costing them money whether they use it or not and what they have used will have to be repaid.

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22 minutes ago, t-b-g said:

The thread should have its name changed to "How to change a story about a big improvement in their fortunes into another Hornby knocking session in two pages".

 

 

Or - 'Injecting a Hint if Realism Into The Story'.  The profit is of course excellent news.  But if they couldn't make some sort of profit in the wider situation of 2020 there would have been something seriously wrong with the company in view of the fact that its business is in an area where retailers were seeing significant increases in sales and profits as a consequence of the pandemic and lockdowns etc because of major changes in consumer spending.  

 

So inevitably the question has to be as consumer spending reverts, at least in part, to its previous pattern will that adversely  impact Hornby's sales and will a changed level of sales still return an operating profit?  That is the big question for lots of businesses which have done well out of the pandemic, not just for Hornby - but Hornby is the subject of this thread.

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Speak it not in Gath, but Hornby’s recently tooled ‘hi fi’ models are consistently cheaper  than similar items from Bachmann, the main competitor.  For example, J50 £74.99, 57xx £119.95, or Mk1 coach H £34.99, B £54.95.  Now this is pretty simplistic and you may perceive one firm’s product to be  better value than the competitor’s on other grounds than RRP, but it seems reasonable to postulate that the costs are ballpark similar for both companies. 
 

This suggests one or both of two things to my mind (and it is important at this point to mention that I have no business experience and little knowledge of marketing or production costs).  The first thing is that there is room for Hornby to increase prices of their ‘serious’ models and still come in less than Bachmann, and the second is to question Bachmanns’ pricing.  
 

I am unable to say if increasing prices on railway items that represent a portion only of H’s revenue would have much effect on the overall company profit levels, but I do not think that it is likely that the core markets (collectors and us) will radically change our spending habits in the face of price increases; by and large, if we want it and can afford it, and it is available, we’ll ‘ave it!

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2 hours ago, The Stationmaster said:

Or - 'Injecting a Hint if Realism Into The Story'.  The profit is of course excellent news.  But if they couldn't make some sort of profit in the wider situation of 2020 there would have been something seriously wrong with the company in view of the fact that its business is in an area where retailers were seeing significant increases in sales and profits as a consequence of the pandemic and lockdowns etc because of major changes in consumer spending.  

 

So inevitably the question has to be as consumer spending reverts, at least in part, to its previous pattern will that adversely  impact Hornby's sales and will a changed level of sales still return an operating profit?  That is the big question for lots of businesses which have done well out of the pandemic, not just for Hornby - but Hornby is the subject of this thread.

 

It is just my observation of the way people write about Hornby on here. 

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Just now, t-b-g said:

 

It is just my observation of the way people write about Hornby on here. 

I've seen worse on Facebook where people are less restricted in how they air their views.

 

But there is a general resentment towards Hornby and possibly Bachmann - covering price, delivery, quality whilst looking at new entrants as saints and saviours.

 

It seems to be human nature to kick those perceived as weak whilst lifting the new kings and queens aloft, not that I agree with it.

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Posted (edited)
59 minutes ago, woodenhead said:

I've seen worse on Facebook where people are less restricted in how they air their views.

 

But there is a general resentment towards Hornby and possibly Bachmann - covering price, delivery, quality whilst looking at new entrants as saints and saviours.

 

It seems to be human nature to kick those perceived as weak whilst lifting the new kings and queens aloft, not that I agree with it.

If you are looking at the financial performance of a company that is what you are doing and in some respects that irrespective of who that company is but it's natural to comare companies ina broadly similar line of business. So

 

Bachmann Europe Most recent accounts published are to year end 31 December 2019.  Turnover £ 13.9 million, gross profit £4,423 million, profit before taxation £206,000,  cash in hand £2.5 million

Hattons. Most recent accounts published up to year end  30 June 2020.  Turnover £12.6 million, gross profit £3.9 million, profit before taxation £492, 901.  Cash in hand £1.6 million.  Note H

Rails.  Most recent accounts published up to year end 31 March 2020.  Rails are exempted from full accounts so do not show so much information however they had £129,331 cash in hand and were showing £162,515 as 'retained earnings'. (which does not mean profit)

Hornby Group.  Most recent trading statement for year ended 31 march 2021 (i.e not complete accounts)   Revenue £48.5 million, (gross profit £21.7 million), operating profit £0.6 million, profit before taxation £300,000, net cash £4.7 million.  NoteHb  

 

So, in summary in terms of profit before taxation on sales/turnover in their most recently submitted accounts-

Bachmann made £206,000 on sales of £13.9 million

Hattons made £492,901 on turnover of £12.6 million

Hornby Group made £306,000 on sales of £48.5 million

 

The picture on gross profit is rather different and much more in Hornby's favour in percentage terms (and in many respects the fact that Hornby is starting from a worse past financial positions as well as its level of costs etc hasa greater impact on profit before taxation)

Bachman made £4.42 million on turnover of £13.9 million

Hattons made £3.9 million on turnover of £12.6 million

Hornby Group made £21.7 million on sales of £48.5 million

 

Note H. Hattons recorded a declines in sales but an improvement in profit compared with the previous year.

 

Note Hy . In the trading statement Hornby record an Undrawn Loan facility of £14,4 million.  Their current loan facilities are £12 million with PNC and what was originally (in 2018) a £6 million facility with Phoenix which was increased to £9 million in late 2019/early 2020  giving a total loan facility of £21 million

Edited by The Stationmaster
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Hornby's behaviour towards their fair competition is notably aggressive, arrogant, greedy, and proprietorial; it is hardly suprising that they have attacted a degree of negativity here!  I am pleased they have turned a few honest pennies, but have commented in a way that I think puts the amount into perspective, and feel that any criticism I have made of them is justified and appropriate (not to say that there are not congenital 'Hornby bashers' on the site).  The name is iconic and attracts a huge amount of goodwill from both customers and investors, and the soap opera has attracted the media so it has become quite public, and they thus have a responsibility (which they did not seek, but have nonetheless) to be the hobby's standard bearer and public image; I would advise Hornby to be careful how they treat this goodwill, as the company would go down faster than the Titanic without it, and they are already losing friends both inside and outside the trade.  They are not weak kicking fodder that we are taking advantage of at all, they are the biggest player on the UK scene and the only model railway company that is a household name,  Nobody likes bullies.

 

There are some people who have gone as far as boycotting their products, which is up to them and their choice.  I will buy Hornby stuff if I want it, can afford it, and it is of decent quality, which much of it is.

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@The Stationmaster interesting comparisons and Hattons are turning quite a nice profit there.

 

I wasn't getting at a straightforward factual criticism as Hornby are not angels and have used some questionable tactics but as @t-b-g notes any thread about Hornby turns into a slating and my observation is that what is on here is nothing compared to whats out in wider social media.

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5 minutes ago, The Johnster said:

Hornby's behaviour towards their fair competition is notably aggressive, arrogant, greedy, and proprietorial; it is hardly suprising that they have attacted a degree of negativity here!  I am pleased they have turned a few honest pennies, but have commented in a way that I think puts the amount into perspective, and feel that any criticism I have made of them is justified and appropriate (not to say that there are not congenital 'Hornby bashers' on the site).  The name is iconic and attracts a huge amount of goodwill from both customers and investors, and the soap opera has attracted the media so it has become quite public, and they thus have a responsibility (which they did not seek, but have nonetheless) to be the hobby's standard bearer and public image; I would advise Hornby to be careful how they treat this goodwill, as the company would go down faster than the Titanic without it, and they are already losing friends both inside and outside the trade.  They are not weak kicking fodder that we are taking advantage of at all, they are the biggest player on the UK scene and the only model railway company that is a household name,  Nobody likes bullies.

 

There are some people who have gone as far as boycotting their products, which is up to them and their choice.  I will buy Hornby stuff if I want it, can afford it, and it is of decent quality, which much of it is.

 

So Hattons, Rails etc. trying to cut Hornby and others out by going direct to the factories and becoming manufacturers is fine but Hornby trying to cut Hattons and Rails out by selling direct to the public is greedy and aggressive etc.

 

I think I understand.

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9 minutes ago, t-b-g said:

 

So Hattons, Rails etc. trying to cut Hornby and others out by going direct to the factories and becoming manufacturers is fine but Hornby trying to cut Hattons and Rails out by selling direct to the public is greedy and aggressive etc.

 

I think I understand.

The retailer/manufacturers are offering us buyers products we can't buy from Hornby, all Hornby are doing is offering us one more 'shop' we can buy (exclusively) their products from amongst many.

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Just now, spamcan61 said:

The retailer/manufacturers are offering us buyers products we can't buy from Hornby, all Hornby are doing is offering us one more 'shop' we can buy (exclusively) their products from amongst many.

 

OK. I give up. Carry on bashing!

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What exemplifies the disparity between the old and new manufacturers is how they are treated with duplications:

Hornby bad for doing a Terrier when Rails announced theirs.

Hornby bad for doing a class 91 when Cavalex were also doing one

 

But....Cavalex and Accurascale doing HAA and all it's merry (go round :)) derivatives is fine, because Accurascale is doing different models in batch one to avoid absolute duplication.

 

No, it's all OK because actually it's just business and I am fully coming around to this, it's not David and Goliath, it's just business.

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5 minutes ago, woodenhead said:

What exemplifies the disparity between the old and new manufacturers is how they are treated with duplications:

Hornby bad for doing a Terrier when Rails announced theirs.

Hornby bad for doing a class 91 when Cavalex were also doing one

 

But....Cavalex and Accurascale doing HAA and all it's merry (go round :)) derivatives is fine, because Accurascale is doing different models in batch one to avoid absolute duplication.

 

No, it's all OK because actually it's just business and I am fully coming around to this, it's not David and Goliath, it's just business.

Simple really - it's a modern example of the 'better mousetrap' sales effect.  If someone makes a better mousetrap the theory is (price considerations apart) that people wanting mousetraps will flock to your door.  However there is also an economic effect as well because in a free market some people will always buy the cheaper mousetrap if it does the job they want it to do (and sometimes even if they find out that it doesn't do the job they want it to).

 

All of which is getting us a long way from a look at Hornby's trading statement.

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6 minutes ago, The Stationmaster said:

All of which is getting us a long way from a look at Hornby's trading statement.

Depends if your mousetrap has a TTS sound decoder or a Next21 socket for more authentic bone cracking shrieking death effects.

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But for the TV series, Hornby's "high street" customers would probably have been unaware of the Terrier conflict with Rails. However, I consider Hornby did a pretty good job of casting themselves in the role of the baddie in the eyes of the enthusiast market that looks at these things in a bit more detail.

 

They then compounded the impression of being combative rather than competitive, with a vindictive streak, to boot, by pulling the rug from under Hatton's pre-order portfolio, evidently unconcerned that the ultimate purchasers would not unanimously blame Hatton's for the disruption of their advance planning.   

 

That's led many of us to recognise that the r-t-r end of the hobby is perhaps rather top-heavy and might be healthier with the half-dozen or so new "manufacturer/commissioners" growing in influence, and Hornby becoming somewhat less dominant as a by-product of that. 

 

Unfortunately, Hornby as an entity, remains somewhat fragile and that process carries the risk of going further than anybody expects or wants. OK, history suggests that somebody would (again) pick up the pieces, but the hobby can do without such an upheaval. Even "the competition" has an interest in a commercially sound Hornby, after all, even Bachmann need someone to make (most of) the locos that will pull their Bulleid coaches.:angel:

 

John    

 

 

Edited by Dunsignalling
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1 hour ago, t-b-g said:

 

OK. I give up. Carry on bashing!

I think there is a difference between justifiable criticism and comment and bashing.  Your opinion may be different, and I have no problem with that.  I am happy to praise Hornby when they deserve it, as you will see if you read my comments about the Collett 57' suburbans and the new large prairie, but will express my views when I think they are behaving badly, which I think they are with their competitors and the retailers, throwing their weight about and generally bullying.  Business is business, capitalism red in tooth and claw, but behaviour of this sort will have consequences in the minds of investors and the company may come to regret some of its tactics, which I doubt have increased profits or sales and have certainly damaged their reputation within the trade.

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