- Hornby said it planned to make £500,000 worth of cuts next year
Hornby shares fell over 13 per cent on Wednesday as the group revealed the progression of its restructuring efforts in its latest half-year results.
The model train maker’s net debt stood at £18.9million by the end of the period, up from £14.8million at the same point a year ago.
Hornby said job cuts and a restructuring in September had shaved £1million of its annualised central cost base, ‘with a further £500,000 to come out in 2025’.
The group reported smaller operating losses for the first half of its financial year as it continued a turnaround, advised by Sports Direct founder Mike Ashley.
Hornby said revenue jumped 10 per cent to £25million for the six months ending 30 September, with underlying losses falling slightly to £3.8million, from £4.1million a year ago.
The group’s statutory pre-tax losses reached £5.1million, up from a loss of £4.9million previously.
Falling shares: Shares in London-listed Hornby fell over 13% on Wednesday
Shares in Hornby fell 13.08 per cent or 3.4p to 22.60p on Wednesday, having risen over 40 per cent in the last year.
Chief executive Olly Raeburn said: ‘We have enjoyed revenue growth at the top line for five years in a row, but our return to profitability has been held back, in part, by a central cost base that has grown disproportionately over the years and is suited to a larger business.’
He added: ‘In H1 2024 we spent a great deal of time looking at structures and costs across the organisation and enacted a significant headcount reduction in the Margate head office in September.
‘We continue to review our central overheads, and cost base in totality, and there are a number of live initiatives in play that will further, positively, impact this number moving forwards.’
Raeburn said strategic and structural changes aimed at operational efficiencies and cost savings may not have an impact until the next financial year, adding that ‘we are firmly focused on right-sizing the business for sustainable growth.’
He said: ‘Revenue performance versus last year has been solid, and we exit the half year with a clear, and aggressive, plan for maintaining that momentum through the critical Black Friday and Christmas trading periods.’
Hornby’s digital revenue increased by 12 per cent compared to the same period in 2023 and were up 45 per cent compared to the first half in 2022.
Earlier this month, Hornby revealed it had agreed to sell off a loss-making subsidiary which makes Oxford Diecast models.
The Margate-based company told shareholders it has entered into a conditional agreement to sell its LCD Enterprises business to EKD Enterprises.
EKD, a business owned by former chairman and current non-executive director Lyndon Davies and his family, will pay £1.38million for the operation.
The sale will see EKD take control of the Oxford Diecast brand, which was started in 1993 and is one of the world’s largest manufacturers of 1:76 scale models.
Hornby said Oxford Diecast made a roughly £200,000 pre-tax loss for the year to 31 March.
In March this year, Mike Ashley said he would advise Hornby after building up a stake in the model train specialist.
The toy company said the Frasers Group founder and majority owner ‘entered into a consultancy arrangement’ as it sought a financial turnaround.
Russ Mould, investment director at AJ Bell, said: ‘You could hardly say toy outfit Hornby’s turnaround is going like clockwork.
‘The company continues to chalk up losses which only ramps up the pressure ahead of its key trading update.
‘It will be praying its model railways are filling stockings of big kids and little kids alike when it comes to the big day. A decent Christmas could give the recovery a bit of momentum ahead of a planned rejig of its logistics set-up in 2025, which is expected to help reduce costs.’
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