Hornby Regulatory News (HRN)

31 Jan 2005 07:00

Hornby PLC31 January 2005 Trading Update HORNBY REPORTS STRONG PRE-CHRISTMAS TRADING AND ENCOURAGING OUTLOOK In line with recent practice, Hornby Plc ("Hornby" or "the Company") is todayissuing an update on trading, including detail on sales performance in thepre-Christmas period. Despite generally difficult trading conditions in the wider UK retail sector,Hornby's ranges, in particular model railways have performed well. The robustcharacteristics of the collectable and hobby market have resulted in continued,strong consumer demand. The new product ranges launched in early 2004 haveproved to be very popular. The Live Steam range of model trains and the range ofhistoric Scalextric racing cars have strengthened the Company's position in thehobbyist and enthusiast market. There is evidence that these new product lineshave helped to attract a number of customers new to the hobby. Pre-Christmas Trading The Company enjoyed a buoyant performance prior to Christmas. Sales, both ofHornby railways and Scalextric slot car racing products, in the three-monthperiod to December 2004 were higher than the previous year. One of the maindrivers of this growth was the Company's network of in-store concessions. Hornbynow operates 120 concessions, which are proving popular with enthusiasts andcollectors, who often prove to be loyal, repeat customers. The Company has alsomade good progress on improving its listings with the major national retailers.Many are recognising the attractions of product associated with the hobby andcollectable market, and Hornby has proved that the popularity of its productranges is a long-term trend. Given the continued calendar of product launches and the excellent performanceof its new Scalextric Digital products, the Company also anticipates a goodfinal quarter performance. Overseas Subsidiaries Hornby's Spanish subsidiary Electrotren, acquired in March 2004, has alsocontinued to perform well. It has launched more locally oriented product intoits core markets and it is making encouraging progress in improving itsdistribution channels. As the Company predicted at the time of the acquisition, Hornby is alsoutilising the Company's existing network to drive sales growth in slot-carracing systems into the Spanish market. It is making good progress in winningmarket share. The 'Superslot' racing brand has benefited significantly from thefocus on improving the range and quality of its distribution channels. During 2003, the Company secured the worldwide exclusive licence to produce slotcars associated with the Renault Formula 1 team. Given the popularity of Spanishdriver Fernando Alonso, sales in Spain have been excellent. The impact of theMotoGP motorbikes has also been very pleasing and the Company remains confidentthat it can continue to deliver growth in this market. Following the acquisition of certain assets of Lima S.p.A (in liquidation) inDecember 2004, the process of moving production from Italy to China isprogressing according to plan. The first shipments of moulds were made inJanuary, with deliveries of finished goods from China now expected in the finalquarter of 2005. Feedback from customers around the world has been positive. There is still muchgoodwill associated with the Lima brands and Hornby has a detailed marketingplan in place to help support the re-launch. The Company remains confident thatthe acquisition of the Lima brands and assets will enable Hornby to establish asignificant presence in major world markets for Model Railways. Toy Fair The Company's new products launched at the London Toy Fair last week were wellreceived. Looking forward, this event is always an important barometer ofconfidence in the product ranges. This is the major industry retail exhibitionand the first-class feedback that the Company has received from supportiveretailers gives the Board renewed confidence that the renaissance in popularityof the Hornby product stable continues to be strong. Yet the Board remains awarethat continued innovation and maintenance of a strong pipeline of new productsis an important aspect of its business which underpins the Company's futurestrategy for growth. The Hornby range of model railways has been strengthened with the launch of theA3 Class 'Flying Scotsman', which is being produced in Live Steam. In addition,reaction to the introduction of newly tooled versions of the "Class 08", "Class31", "Class 60" Modern Image locomotives, together with the "Grange", "A1" and"A3" steam locomotives was extremely positive. The Company has also givenattention to its younger customers. The 'Thomas the Tank Engine' range has beenrevitalised and the feedback from retailers gives the Company confidence thatthis will prove to be a popular product range. In Scalextric, the Company has been boosted by the impact of a number ofimportant international licenses which will help to generate further salesgrowth. Hornby has secured a licence with Ferrari and Mattel to produce a numberof slot car models based on current and historic Ferraris. The Company has alsoagreed a licence with Warner Bros. to launch a range of product associated withthe 'Batman Begins' movie, which is expected to be launched in mid 2005.Scalextric Sport World, the interactive competition platform is also proving tobe popular. The Company expects to be shipping this product in the secondquarter. The continued focus on high quality product development linked in thecase of Scalextric to high profile licenses is a proven formula which can beexpected to continue to drive sales growth. In light of the above, Hornby expects to report pre-tax profits in line with theCompany's broker's estimate for the financial year ending 31 March 2005. Chairman, Neil Johnson commented: " I am delighted to report on our recent trading, which continues to reflect thesuccessful product development and marketing strategies being pursued in allsectors of the business. Consumer demand for Hornby and Scalextric remainedstrong prior to Christmas, although peaking very late. " Our strategy continues to be to develop the Hornby and Scalextric brands asmarket leaders that appeal to the broadest possible consumer base. Coupled withthis, our international acquisitions provide an excellent platform to replicateour UK success story in other major markets. We therefore remain confident ofthe future growth potential of the business" -ends -Date: 31 January 2005For further information contact: Hornby Plc City ProfileNeil Johnson, Chairman Simon CourtenayFrank Martin, Chief Executive James Cooper01843-233500 020-7448-3244Web: www.hornby.com This information is provided by RNS The company news service from the London Stock Exchange