Hornby's interim results show increased sales but also increased losses and debt

[micklner]

Hornby have a big problem, the competition.

 

The  sudden glut of new companies over the last few years producing the same in quality , or in some cases far better quality products,  again at the same/similar or even less prices. They need to look at the range(s) and decide what actually makes the money, and dump the rest as they are throwing good money at old goods/tat which no one wants anymore.

[ColHut]

5 hours ago, BachelorBoy said:

How would you feel if it were transferred to Australia? :-)

Pretty disappointed. :). And I live here. :).
 

It is the nature of things but what happens when a vountry you run out of things of your own to sell  to buy the things you are having made overseas and consider the environmental impact etc.

 

regards

[blueeighties]

2 hours ago, ColHut said:

Pretty disappointed. :). And I live here. :).
 

It is the nature of things but what happens when a vountry you run out of things of your own to sell  to buy the things you are having made overseas and consider the environmental impact etc.

 

Eh?

 

Edited November 25, 2023 by blueeighties

[ColHut]

Eh?

 

Inasmuch as the comment I was commenting on could be taken to suggest that if the jobs had gone to Australia rather than India I would have found that okay , I was disagreeing with that.  I would be equally unhappy despite being in Australia myself (and likely a beneficiary of cheaper product).

 

My further comments were pointing out the reasons:  If you keep making stuff overseas, and you do not make things yourselves that other people want , then eventually you go broke, and that there is also a damaging impact on the environment  when goods are shipped halfway across the world.

 

YMMV

 

:)

[Andy Hayter]

1 hour ago, ColHut said:

Eh?

 

Inasmuch as the comment I was commenting on could be taken to suggest that if the jobs had gone to Australia rather than India I would have found that okay , I was disagreeing with that.  I would be equally unhappy despite being in Australia myself (and likely a beneficiary of cheaper product).

 

My further comments were pointing out the reasons:  If you keep making stuff overseas, and you do not make things yourselves that other people want , then eventually you go broke, and that there is also a damaging impact on the environment  when goods are shipped halfway across the world.

 

YMMV

 

:)

 

While those comments should apply to major industries such as steel, vehicle production, cement; I don't think they are transferable to niche industries like model railways.   The opportunities to split production close to the markets around the world must be vanishingly small.  The argument also misses the point that it is possible to manufacture in another country and still repatriate the profits back to the home country.

 

 

On the  points made by others:

Autonomous brand separation - my thoughts on reading this was exactly the same as those posted by @wombatofludham.  Having been through this personally in the 80s with the eventual divestment in the 90s, such brand separation does open the doors to divestment.  It also allows management to get a clearer view of profit and loss in each product*.  None of this means that the Hornby brand is up for grabs though.  It may well be that the focus will fall on other brands.  It will be interesting to see how far the autonomy is created - to individual brands in the modem railway sphere (Hornby, Jouef, Arnold etc) or whether model railways will be treated as a cohesive business group.   There are arguments for doing both - negotiating with Chinese producers being one advantage of keeping a widely embracing group; while it could reduce the opportunity to easily sell off an individual railway brand.

 

Has Hornby had its day? - Well judging by this thread, with this group of posters/analysts, I would say its importance has certainly waned.  10 years ago when I joined RMWeb,  the discussion of Hornby results a couple of days in would have run to close to or more than double figures of pages, yet here we are on page 2.   Competition has certainly reduced the importance of Hornby to the serious rtr modeller.  However the fact that we would seem to hold Hornby as less important does not mean that it is less important in the overall market.   It could just be that we are the dinosaurs and not Hornby.  

 

*  This can be a two edged sword, since it is likely to overlook the benefits of working as a group.  The opportunity to sell all brands through the same outlets in a simplified way, as already noted, being just one.  It might also annoy the trade outlets if for  example they have to order individually for each brand and get invoices and have to make payments similarly - assuming they don't have to do this already.

[burgundy]

On 25/11/2023 at 04:35, ColHut said:

 Year on year there seems to be endless crises, a new wonder solution and the crises roll on.  And frankly there are plenty of other suppliers out there who will fill any gaps.  It just could be time to let go.

 

fyi 10 yr share price:

 

https://www.hl.co.uk/shares/shares-search-results/h/Hornby-plc-ordinary-1p

 

Can anyone remember what happened in 2015 when the share price fell off a cliff?

Best wishes 

Eric

[jjb1970]

I wouldn't assume that globalised manufacture has a higher environmental impact than localised production. To form an opinion on that needs a case specific analysis, which is sensitive to all sorts of variables such as electricity grid mix and raw material flows. If just looking at transport, the cost and GHG emissions for a model attributable to shipping them from East Asia to Europe are trivial. The GHG footprint to deliver them from a model shop to your door can be higher. Thanks to the efficiency of big container ships in terms of ghg emissions per tonne-mile.

[BachelorBoy]

16 hours ago, GenericRMWebUsername said:

I doubt that depreciation expenses will be a problem. I'm not sure what depreciation method Hornby is using for their tooling, 

I hope this bit of the interim results is helpful

 

[BachelorBoy]

16 hours ago, micklner said:

They need to look at the range(s) and decide what actually makes the money, and dump the rest as they are throwing good money at old goods/tat which no one wants anymore.

 

Throwing good money at stuff that loses money is a Hornby tradition. What's really clever is that it keeps getting people to give it money to waste.

 

This is interesting

 

https://davidamerland.com/seo-blog/820-case-study-how-Hornby-lost-the-olympics.html#gsc.tab=0

 

 

 

Edited November 26, 2023 by BachelorBoy

[BachelorBoy]

1 hour ago, burgundy said:

Can anyone remember what happened in 2015 when the share price fell off a cliff?

Best wishes 

Eric

From The Guardian

 

Hornby losses widen amid supplier problems and IT upgrade

Revamp of computer and stock systems, as well as trouble with Chinese suppliers, dented sales in the summer

Sean Farrell

Tue 8 Dec 2015 08.44 GMT

 

Hornby has posted a £4.5m loss for the first half of its financial year after an overhaul of the model railway maker’s operations disrupted sales. The group, whose products include Corgi Cars and Airfix kits, also struggled to get products into European stores from its Chinese supplier.

The pre-tax loss for the six months to the end of September widened from £520,000 a year earlier as sales fell to £22.3m from £24.2m. Excluding exceptional items, Hornby swung to a £3.4m loss from a £250,000 profit a year earlier.

Hornby has been upgrading its computer and stock management systems in the UK and Europe while bringing in new managers. The revamp caused UK sales to fall sharply over the summer and affected Hornby’s European business, which was also hit by problems getting products made in China on to shelves.

The group has had trouble with its Chinese suppliers for many years after moving production from the UK in the late 90s. After extricating itself from a long-running contract, it had further problems this year and issued profit warnings in September and November.

Hornby said it was looking for additional manufacturers in China and elsewhere and that it would open a new warehouse in China to give it greater control over suppliers.

In the UK, business has recovered from the summer disruption and sales are rising, Hornby said. With Christmas approaching, the company’s main products include an 80th anniversary set of silver LNER locomotives and a James Bond Spectre themed Scalextric set.

Richard Ames, Hornby’s chief executive, said: “We are at an important stage in Hornby’s transformation. Following significant disruption in the first two months, the business is performing well in the important Christmas and New Year period.

“We have pulled forward our reorganisation plan for our European operations, which has contributed to further trading disruption but which accelerates our overall plan.”

Hornby said it expected to post a £2m loss excluding items for the financial year, in line with the guidance when it published its second profit warning last month.

Hornby’s shares fell 4% to 91p. The shares are up 17% this year but have fallen from the 111p level reached in August.

 

(The share price on Friday 24 Nov 2023 was 15.5p)

[BachelorBoy]

4 hours ago, ColHut said:

 If you keep making stuff overseas, and you do not make things yourselves that other people want , then eventually you go broke, and that there is also a damaging impact on the environment  when goods are shipped halfway across the world.

 

YMMV

 

:)

 

If you're worried about the effect on the environment, then, as you live in a country that is a long way from Europe and China, perhaps you should stop buy imported model railways? :-) 

 

[Widnes Model Centre]

2 hours ago, Andy Hayter said:

.  

 

*  This can be a two edged sword, since it is likely to overlook the benefits of working as a group.  The opportunity to sell all brands through the same outlets in a simplified way, as already noted, being just one.  It might also annoy the trade outlets if for  example they have to order individually for each brand and get invoices and have to make payments similarly - assuming they don't have to do this already.

I can confirm that all brands appear on combined invoices.

 

What l haven’t been able to understand is their distribution it seems haphazard at the best of times.

 

Friday, your Hornby parcel is on its way. Hurrah, invoice arrived the same evening, my world fell apart….. no Airfix in the delivery.

 

It was a Hornby delivery on Saturday lunchtime. It only ever happens at this time of year. New 2MT’s.

 

Email from DPD on Saturday afternoon saying that they were expecting my Hornby parcel. Invoice on Saturday evening but only for half my Airfix order. Hoping the other half of a very much anticipated new release will follow. That cannot be cost effective.

[BachelorBoy]

One of my favourite graphs. If you'd bought £100 of Hornby shares in 1993, they'd now be worth about £50. 

 

[spamcan61]

22 minutes ago, BachelorBoy said:

One of my favourite graphs. If you'd bought £100 of Hornby shares in 1993, they'd now be worth about £50. 

 

So essentially the only big upwards movement in stock price was during the Sanda Kan 'Golden era' 2000-2007. Once that was over it's back to the usual 'just about staying afloat' mode that seems to have been their modus operandi since the early 1970s.

Edited November 26, 2023 by spamcan61

[The Stationmaster]

On 25/11/2023 at 08:05, jjb1970 said:

The Hornby wildcard is TT, I think in a few years that will be looked back on as either a brilliant move and transformative for the hobby or folly.

... or transformative for Hornby.

 

But TT120 is a recignisable separate Hornby brand with, so far, little muddling of what it is.   Thei big prolem as i see it is in 00 where they have noy pnly several brands but brands which overlap each other ona sort of 'just growed' basis witha lot of blurring between the,  There; no clear pont of difference between Railroad and 'red box' Hornby at its bottom end.    And the re-creation of the Hornby Dublo brand is almost becoming as blurry at the top end of the 'red box' brand while the more collectable targetted models sit in their own uneasy places somewhere at the top end but incinsitently marketed just to make things a bit worse somewhere.  Those overla[s really need to be sorted to create better definition between them in both marketing and at point of sale - and there's probably never been a better time to do it.  Nothing wrong with having identifiably different brands, albeit possibly with a small risk of sales abstraction between them (but still internalised).

 

If Oxford Rail can be revived as a brand within the overall business and be 'different' there's no reason why that principlecan be more widely applied

[rogerzilla]

My guess is that the brand will always survive, since it is very cheap to buy up a failed company for its brand and IP, debt-free.  Someone will take it on.

[ColHut]

6 hours ago, jjb1970 said:

I wouldn't assume that globalised manufacture has a higher environmental impact than localised production. To form an opinion on that needs a case specific analysis, which is sensitive to all sorts of variables such as electricity grid mix and raw material flows. If just looking at transport, the cost and GHG emissions for a model attributable to shipping them from East Asia to Europe are trivial. The GHG footprint to deliver them from a model shop to your door can be higher. Thanks to the efficiency of big container ships in terms of ghg emissions per tonne-mile.

Maybe,  but not trivial.  A bit OT , but as a rough guide Shanghai to Amsterdam is about a smidgin under 1tonne of carbon per container for the journey.  A delivery truck about 300 grams per tonne - kilometre.  And yes both of these ignore the lifetime carbon cost of manufacture (new steel about 1.5 tonnes per tonne) and recyling of the transport medium, and how long that lifetime is etc. etc.

Regards

[The Stationmaster]

1 hour ago, BachelorBoy said:

One of my favourite graphs. If you'd bought £100 of Hornby shares in 1993, they'd now be worth about £50. 

 

But if I'd bought 1,000 shares about 7-10 days ago and had sold at the tight time in the past few days I'f d have made £30 (less dealkling charges of course).

 

The shares have indeed tunm bled massively over a relatively short period but the Trading Statement seems to have done more - for now - to lift them a bit rather than the opposite.  OK so that is just the forst couple of days but even with numbers like that teh shares din't fall off another cliff.    But it will b einytreresting to see what happens in the New Year when they have a habit of declining after a occasional small spurt upwards..

[APOLLO]

I've been a Tri-ang / Hornby fan and buyer for around 60 of my 71 years. Starting off in TT back around 1960 was exciting, but very soon after they stopped making it and I was increasingly getting a little fed up as shop stocks etc ran out. Starting work in 69 and moving house in 1972 that was it - all my TT packed was away, it was mostly worn out anyway. I still have it all, and I had a look recently at the new TT120 but it's incompatible with my old TT3, and as Ian Hunter sang, Once bitten twice shy. In all honesty I'll give it just a few years, a passing fad. Hope I'm wrong.

 

I started in OO in 1972, the range of OO manufacturers and models back then was a revelation compared to TT. Later I tried a bit of N/American HO but now I have mostly completed layouts British OO in the loft and N/American O in the garage.

 

I have lots of Hornby OO (along with many other makes) acquired over the years, and I'm pleased with most, both accuracy and running etc. I buy little these days, basically I have what I need. Hornby Railroad was always a winner for me, superb value for money, The 9F's, Black 5's etc are staple stuff and real value for money. Long may it continue.

 

Good luck Hornby.

 

Brit15

 

 

 

 

[adb968008]

9 hours ago, BachelorBoy said:

One of my favourite graphs. If you'd bought £100 of Hornby shares in 1993, they'd now be worth about £50. 

 

If you’d bought 3x Hornby 110’s in 1993 for £29.99 they’d  be worth nearly £300 now.

Edited November 26, 2023 by adb968008

[adb968008]

Am I reading this right…

 

Quote

The additions comprise new product tooling (£2,783,000)

And

 

Quote

Contracted for but not provided for £2,175mn

 

The commitments relate to the acquisition of tooling as part of property, plant and equipment.

someones doing a lot of shopping…

[adb968008]

Quote

 

The report reads a bit challenging to me, an acquisition, more exceptionals, stock levels increasing.
 

The interest payments look alarming, I could only imagine getting higher in the next 12 months.

 

if i’m reading this correctly Hornby is £10mn smaller than last year..

equity of £31mn, I could suggest 10% (£3.5mn) is a “Deferred income tax assets”, 5% (£1.7mn) is goodwill… and 70% (£24mn) is stock.

 

Quote

That said, we have reduced the amount of stock aged more than 12 months, that we held at 31st March, by 18%, through effective promotional activity and close management of key existing retailer relationships.

12 months ago that stock level was £22.5mn, so implies c£4mn has sold..

So does that mean today thats c£16mn of last years stock, with an extra c£8mn from this year to get to £24mn… plus theres £1.8mn in depreciation too somewhere?

 

Whats missing in this report… ?

 

TT… where is this golden goose ?, if it was striking out of the park surely some kudos would be due, not even 1 mention, even the exit of Simon gets mentioned twice, Warlord 7 times.

 

I suppose 2023 isnt a bad year to be a bit of a mess, but it doesnt read good.

 

The next report should be the true revealing, we are into “the hobby season” and this is where thats expenditure is supposed to generate a harvest.

Edited November 26, 2023 by adb968008

[Ravenser]

On 25/11/2023 at 16:41, micklner said:

Hornby have a big problem, the competition.

 

The  sudden glut of new companies over the last few years producing the same in quality , or in some cases far better quality products,  again at the same/similar or even less prices. They need to look at the range(s) and decide what actually makes the money, and dump the rest as they are throwing good money at old goods/tat which no one wants anymore.

 

Thr problem with that is it may be the old tat that makes the money....

 

Hornby seem to have no problem selling ex Lima 66s, 37s and 47s, which most folk on here would regard as old tat. On the other hand they are stuck with J15s - a nice enough model - that they can't get shot of. The K1 was a well regarded model - and another one that was a commercial failure clogging up the warehouse. Yet the ever-reviled Gresley Pacifics seem to sell and sell

 

The way that Hornby have repeatedly re-run the Railroad ex Lima 31 while rarely producing their full fat high spec 31 is very significant . For about 15 years they "owned" the subject. But the Railroad model got the production slots.

 

I fear we may not like the results of a rigourous assessment of model profitability . It may be the hifi stuff (not the Dublo collectables though) that gets the chop.... 

Edited November 26, 2023 by Ravenser

[Andy Hayter]

13 hours ago, BachelorBoy said:

 

Throwing good money at stuff that loses money is a Hornby tradition. What's really clever is that it keeps getting people to give it money to waste.

 

This is interesting

 

https://davidamerland.com/seo-blog/820-case-study-how-Hornby-lost-the-olympics.html#gsc.tab=0

 

 

 

I understand the comment and if you or I were to buy a few shares that would certainly apply.

 

However regarding the main shareholders, there is something you overlook.  The principle shareholder has given Hornby a revolving door credit of (IIRC) GBP 10m.  Hornby can call on this as and when they require for short term cash flow or investment.   The accounts show GBP 653,000 being repaid as interest in the 6 months.  Simplistically you could double that for the year as an annual rate (In fact it is more than double but let's keep things simple.).  So 1.3m return on a 10m loan facility (13 percent) is a nice little earner and a lot more than we could get from the savings account.  

 

You may think these boys are silly but they are a sight smarter financially than me.

[adb968008]

29 minutes ago, Andy Hayter said:

I understand the comment and if you or I were to buy a few shares that would certainly apply.

 

However regarding the main shareholders, there is something you overlook.  The principle shareholder has given Hornby a revolving door credit of (IIRC) GBP 10m.  Hornby can call on this as and when they require for short term cash flow or investment.   The accounts show GBP 653,000 being repaid as interest in the 6 months.  Simplistically you could double that for the year as an annual rate (In fact it is more than double but let's keep things simple.).  So 1.3m return on a 10m loan facility (13 percent) is a nice little earner and a lot more than we could get from the savings account.  

 

You may think these boys are silly but they are a sight smarter financially than me.

Isnt there annual management fee also to the parent group ?..  and Rawnet…

 

That said, they paid a lot more than the curent share price too..

Edited November 26, 2023 by adb968008