Hornby see full--year results significantly improved vs yr-earlier

Hornby (LSE: HRN) said it expects to finish the financial year with sales and profits significantly ahead of last year. In a trading update the hobby group said its products have seen higher demand since its H1 results, in the period from 1 October 2009 to date. The company has also addressed the supply issues, Hornby said.

"We have entered 2010 in a strong position. Sales were encouraging in the important pre Christmas period and indeed in the early weeks of 2010. This should ensure a positive final quarter to the financial year as retailers replenish their stocks”, said Hornby chairman Neil Johnson, "The progress that has been made in resolving the previous supply chain issues, coupled with a more favourable Dollar/Sterling exchange rate will stand the company in good stead during the next financial year.”

According to Hornby, its retailers ended the year with stock inventories at historically low levels due to the significantly increased number of shipments in the pre-Christmas trading period. Demand for its Airfix, Humbrol and Corgi brands in particular have shown encouraging growth. Furthermore the toy and model maker said that the stronger demand continued through January and its experiencing a high level of order intake.

The company’s European businesses provided support during the downturn, with its growth offsetting some of the negative foreign exchange effects. Hornby said that increased overall exposure to Euro denominated markets has helped to mitigate the effects of sterling weakness, the currency in which most of its purchases are made. Although it continues to maintain a close relationship with its principal Chinese supplier, Hornby has diversified its supply base reducing its exposure to just one major supplier. The company’s supply chain is now benefiting from increased demand and reliability.

Hornby said it has renewed confidence going forward, as its improved supply chain will be able to support growing demand. The company is continuing to develop new products through new licensing agreements, with Disney/Pixar licenses secured for 2010, both Hornby and Micro Scalextric brands are developing products for the summer release of Toy Story 3. Hornby has also launched its first products associated with the London 2012 Olympic Games.  http://www.proactiveinvestors.co.uk/companies/news/12551/hornby-see-full-year-results-significantly-improved-vs-yr-earlier-12551.html