Hornby Loss

[Dunsignalling]

If TT:120 doesn't pay off for Hornby, we might be more likely to see them being taken over by Hatton's. 

[AY Mod]

9 hours ago, Dunsignalling said:

Fortunately for Hornby, it appears that their own legal eagle pointed out, in timely fashion, the potential consequences

 

Not just legal eagles.

 

My invite to the media briefing for the 2023 range must have got lost. 😎

 

Anyway, I'm washing my hair.

[adb968008]

2 hours ago, spamcan61 said:

This has been very noticeable over the last couple of years, and I don't think it's confined to Hattons, several of the big/medium sized players have been devoting much of their advertising pages in the magazines to second hand. I assume this is at least partially due to lack of availability of new product from the manufacturers. 

I think second hand is going to be a better market for the next few years, and not just model railways but all manner of things.

 

[Roy Langridge]

1 hour ago, adb968008 said:

I think second hand is going to be a better market for the next few years, and not just model railways but all manner of things.

 

Indeed my long held opinion (as explained to the wife) was that my model railway and collection was my retirement fund. Never expected that to truly be case, but now you never know. 
 

Roy

[jjb1970]

Some retailers seem to inflate S/H prices to offset aggressive pricing on some of their new stock. I have nothing against Hattons, I have bought a lot from them and have no doubt I will buy more from them, but some of their S/H prices are silly IMO. I will qualify that by emphasizing that is only my view, if stock sells then I would have to concede that they're pricing it right. 

[1andrew1]

On 03/12/2022 at 10:31, Legend said:

Comparing  Bachmann not really relevant . Remember for most of its models ( not EFE , I think) it has to pay Kader . There’s probably a profit residing in Kader for goods transferred to Bachmann Europe , so it’s not the complete picture . It’s called Transfer Pricing . 
 

Interesting to see sales drop in Hattons 2019- 2020 . Is that the effect of loss of Bachmann and the Hornby Tier system? I can’t remember the timing now . Interesting their pretax profits increasing again . Well done them , although behind it there may have been restructuring and people losing jobs .

Bachmann's sales figure is not affected by any transfer pricing decisions. Its profit figures may or may not be impacted much by transfer pricing but the company is now showing a profit.

 

The other manufacturer which reports a P&L is Peco. The group includes Pecorama and modelling magazines too. 

 

Peco (Pritchard Patent Product Company (2001) Ltd
30/04/2021 Sales £10.1m Post-Tax Profits £187k
30/04/2020 Sales £9.1m Post-Tax Profits £383k
30/04/2019 Sales £9.9m Post-Tax Profits £531k
30/04/2018 Sales £9.1m Post-Tax Profits £332k
 

Edited December 4, 2022 by 1andrew1

[JohnR]

2 hours ago, jjb1970 said:

Some retailers seem to inflate S/H prices to offset aggressive pricing on some of their new stock. I have nothing against Hattons, I have bought a lot from them and have no doubt I will buy more from them, but some of their S/H prices are silly IMO. I will qualify that by emphasizing that is only my view, if stock sells then I would have to concede that they're pricing it right. 

 

I think its a double edge sword for them. A while back, Hattons et al, were getting a lot of grief for their low prices paid for pre-owned stock. So they pay more (it is after all a competitive market for it) - that of course results in higher end prices, which they then get grief for. 

[Legend]

23 hours ago, 1andrew1 said:

Bachmann's sales figure is not affected by any transfer pricing decisions. Its profit figures may or may not be impacted much by transfer pricing but the company is now showing a profit.

 

The other manufacturer which reports a P&L is Peco. The group includes Pecorama and modelling magazines too. 

 

Peco (Pritchard Patent Product Company (2001) Ltd
30/04/2021 Sales £10.1m Post-Tax Profits £187k
30/04/2020 Sales £9.1m Post-Tax Profits £383k
30/04/2019 Sales £9.9m Post-Tax Profits £531k
30/04/2018 Sales £9.1m Post-Tax Profits £332k
 

 Quite . The Turnover figure  is not affected but the profitability certainly is 

Edited December 5, 2022 by Legend

[Clearwater]

Given Bachmann doesn’t have a direct UK retail arm, unlike Hornby and Hattons, I’d anticipate their sales are mostly at trade prices.  Hornby is a mix but Hattons will have a higher proportion than Hornby of retail sales (Though I think Hattons do provide some of their own product to other retailers?).  Hornby appear to achieve a far lower NP/sales figure. This suggests a higher cost base.  I’ve commented previously that I think there’s value for them in looking properly at pricing.  I also think the retailer/manufacturer model will continue to converge so a  question of when not if we start to view Hornby in the same vein as Hattons, Rails, Kernow.

[Dunsignalling]

ISTR Hattons intended to supply at least some of their in-house products to other retailers at one stage, but I can't think of any item that actually has been.

 

John

[adb968008]

5 hours ago, 1andrew1 said:

Bachmann's sales figure is not affected by any transfer pricing decisions. Its profit figures may or may not be impacted much by transfer pricing but the company is now showing a profit.

 

The other manufacturer which reports a P&L is Peco. The group includes Pecorama and modelling magazines too. 

 

Peco (Pritchard Patent Product Company (2001) Ltd
30/04/2021 Sales £10.1m Post-Tax Profits £187k
30/04/2020 Sales £9.1m Post-Tax Profits £383k
30/04/2019 Sales £9.9m Post-Tax Profits £531k
30/04/2018 Sales £9.1m Post-Tax Profits £332k
 

Peco is an excellant barometer of the hobby… consistent results with adjustment for the economy going back years.

 

no drama.

 

[St. Simon]

1 hour ago, Dunsignalling said:

ISTR Hattons intended to supply at least some of their in-house products to other retailers at one stage, but I can't think of any item that actually has been.

 

John

Hi,

 

The P Class, Andrew Barclay, Snowploughs and RHTT were available from retailers from what I remember.

 

But Hattons no longer sell to retailers.

 

Simon

[woodenhead]

1 hour ago, Dunsignalling said:

ISTR Hattons intended to supply at least some of their in-house products to other retailers at one stage, but I can't think of any item that actually has been.

 

John

 

12 minutes ago, St. Simon said:

Hi,

 

The P Class, Andrew Barclay, Snowploughs and RHTT were available from retailers from what I remember.

 

But Hattons no longer sell to retailers.

 

Simon

It all went a little pear shaped when the class 66 came along, those same retailers hoping to get a piece of that model found themselves out in the cold with Hattons only selling it through their own website which rather sounds like another company's dubious wholesaling where some items were not available to the many.  You cannot be marketing yourself as the 'new' manufacturer in town and then keep the biggest value release to yourself.

[JohnR]

1 hour ago, woodenhead said:

 

It all went a little pear shaped when the class 66 came along, those same retailers hoping to get a piece of that model found themselves out in the cold with Hattons only selling it through their own website which rather sounds like another company's dubious wholesaling where some items were not available to the many.  You cannot be marketing yourself as the 'new' manufacturer in town and then keep the biggest value release to yourself.

 

I seem to recall some chatter at the time that Hattons restricted the sale of 66 in an attempt not to annoy Bachmann. Obviously didn't work, but it made sense. 

[woodenhead]

37 minutes ago, JohnR said:

 

I seem to recall some chatter at the time that Hattons restricted the sale of 66 in an attempt not to annoy Bachmann. Obviously didn't work, but it made sense. 

Well given that the only thing now being delivered to Hattons are the Generic coaches and nothing else apparently in the pipeline (it was the only thing I think on the Hattons stall at Warley, or did I miss something?) then perhaps Hattons are now chastened by the experience and waiting to be allowed back into the Bachmann stable.  Or is it now that Bachmann simply do not need Hattons with Rails and Kernow much larger than they were back when Hattons was king.

 

The world is much changed since the early 2010s - the retail seems to focus very much around Rails now, new manufacturers bringing very high fidelity models to market, Bachmann again lifting it's own standards to stay in the game.  But despite all this change and what seems to be a still buoyant market for trains, Hornby still manages to make a loss each year, at least they are consistent.

[1andrew1]

1 hour ago, woodenhead said:

But despite all this change and what seems to be a still buoyant market for trains, Hornby still manages to make a loss each year, at least they are consistent.

Hornby has made a profit in financial years 2021 and 2022. 

It may make even make a profit in financial year 2023. (For the record, I think this unlikely.)

 

Hornby made a half-year loss. Its UK competitors may have made half-year losses as well but  haven't reported their half-year figures as they don't need to.

 

Incidentally, Kader Holdings which owns Bachmann has to report its half-year figures. It made a loss as well - of HK$29.62m (about £3m) on sales of HK$161.14m (about £16.85m) for the six months to June 2022.
 

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

 

[adb968008]

13 hours ago, woodenhead said:

But despite all this change and what seems to be a still buoyant market for trains, Hornby still manages to make a loss each year, at least they are consistent.

There are several companies in the hobby which do well, you never see their names associated with hard times, even in hard times.

 

So its not a problem with the hobby.

 

That to me means its a problem with the company. In simplistic terms companies only revolve around revenue and expenses. One needs to be lower than the other. For several reasons the current company just isn't consistently able to do this judging by its annual reports.
 

For sure theres recent investments in the future, and I hope its not just TT and theres more surprises to come. But hopefully the new CEO hopefully will recognise some of these longer term issues, which imo, have festered for many years, and may need to make unpopular choices and adjustments imo to get this busines ship shape.

Edited December 5, 2022 by adb968008

[1andrew1]

3 hours ago, adb968008 said:

There are several companies in the hobby which do well, you never see their names associated with hard times, even in hard times.

 

So its not a problem with the hobby.

 

That to me means its a problem with the company. In simplistic terms companies only revolve around revenue and expenses. One needs to be lower than the other. For several reasons the current company just isn't consistently able to do this judging by its annual reports.
 

For sure theres recent investments in the future, and I hope its not just TT and theres more surprises to come. But hopefully the new CEO hopefully will recognise some of these longer term issues, which imo, have festered for many years, and may need to make unpopular choices and adjustments imo to get this busines ship shape.

To be fair to Hornby, its peers seem to have similar profitability issues and I've highlighted Kader's recent half-year loss too. Many of Hornby's European peers seem to have fallen into administration in the last 10 years or so too. 
 

In 2017, an article in the German press noted:

Quote

Roco and Fleischmann have been fighting to survive for years. Now the Salzburg Raiffeisen Association [regional bank which has bailed the company out before] is saving the two traditional model railway brands. But it will be difficult for the brands to fire up their engines again.

Both Roco and Fleischmann have been in economic difficulties for a long time - as have large parts of the model railway industry. The industry leader Märklin went to the wall in 2009; its competitors LGB and Roco went a few years before it. Fleischmann had to file for bankruptcy two years ago.

 

 https://www.handelsblatt.com/unternehmen/handel-konsumgueter/modellbahnmarken-kaempfen-ums-ueberleben-bank-soll-fleischmann-und-roco-retten/20465106.html

 

One difficult choice to make concerns profitability in the USA. It's Hornby's second largest market but it seems unable to turn a profit here. Perhaps withdrawing and moving to an agency basis or making a strategic acquisition would solve that issue.

 

Ultimately, I suspect Hornby might become part of another European toy grouping or Phoenix might decide to keep some parts like Corgi and Airfix and sell on the model railway business. Hopefully not, but at the end of the day, they will want their money back to invest elsewhere and someone will have to buy their shares.

Edited December 5, 2022 by 1andrew1

[Andy Hayter]

Don't weep too much for Pheonix.  They have granted revolving 9m finance which earns them 1% over the overnight lending rate ( SONIA) or 3.5-4% above SONIA on money actually borrowed.

 

This deal ends this month and has been replaced by lending from PNC ltd.

[Dunsignalling]

32 minutes ago, 1andrew1 said:

To be fair to Hornby, its peers seem to have similar profitability issues and I've highlighted Kader's recent half-year loss too. Many of Hornby's European peers seem to have fallen into administration in the last 10 years or so too. 
 

In 2017, an article in the German press noted:

 https://www.handelsblatt.com/unternehmen/handel-konsumgueter/modellbahnmarken-kaempfen-ums-ueberleben-bank-soll-fleischmann-und-roco-retten/20465106.html

 

One difficult choice to make concerns profitability in the USA. It's Hornby's second largest market but it seems unable to turn a profit here. Perhaps withdrawing and moving to an agency basis or making a strategic acquisition would solve that issue.

 

Ultimately, I suspect Hornby might become part of another European toy grouping or Phoenix might decide to keep some parts like Corgi and Airfix and sell on the model railway business. Hopefully not, but at the end of the day, they will want their money back to invest elsewhere and someone will have to buy their shares.

 

TBH, I came to the conclusion some time ago that Hornby may have become less than the sum of its parts and that all the parts would probably benefit from greater individual focus. 

 

Insofar as the Hornby brand is concerned, it has little relevance beyond the model railway side. Scalextric, Corgi and Airfix have more cachet in their respective fields. 

 

John

[D9020 Nimbus]

When we talk about "Hornby" making a loss, is it the group making a loss? And if so, to what extent do the various parts of the group, including Hornby model railways, contribute? At least at one time, some of the European brands in the group were the biggest loss-makers. It could be, for example, that Hornby model railways are profitable — there certainly don't seem to be the same number of competing firms in other areas of the group's business, which might suggest a lack of demand in those areas.

[Andy Hayter]

Simple answer is we don't know.  The published accounts are not sufficiently detailed to be able to make judgements.

 

As for the continental brands having minimal competition, that is certainly not the case in France where the historic competition from the likes of Roco, have now been overtaken by relative newcomers like LS Models, REE, and a whole host of specialised small producers.  

 

I don't think Arnold is free of competition from Fleischmann either.  

[D9020 Nimbus]

I was thinking of the other U.K. brands rather than the European ones as being in less active areas—Corgi for example, where the main competitor is probably Oxford…

 

LS Models don't seem as active as they once were but in French HO there is REE, Mistral and R37. Piko's involvement seems somewhat reduced now they are no longer imported by SAI. Arnold seems to be concentrating it’s efforts on those markets where Hornby Group companies are active—France, Spain, Italy.

[Robin Brasher]

Peco seems to be an example of a well run company.

[Mallard60022]

12 minutes ago, Robin Brasher said:

Peco seems to be an example of a well run company.

Agreed, but there have been no large set up costs for (say) Locomotives and Coaches/Stock, on an Annual basis and those really do cost. Peco deal in 'smaller essentials' and also have taken on successful things such as Ratio and Parkside.

Their own costs for new Products have been limited to Track work as far as I can see?

However, I see what you are getting at but Peco have few rivals really for their established standard of product s.

Phil