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DT
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British Formula One hero Lewis Hamilton has put Scalextric back in pole position at toy maker Hornby, helping to drive up sales by 37% in the last six months.

Key points:

* Turnover up by 37% to £24.6 million (2006 - £17.9 million)
* UK and Overseas subsidiaries delivering sales growth
* Pre-tax profits up to £2.6 million (2006 - £1.8 million)*
* Earnings per share up to 3.84p (2006 - 3.16p)*
* Digital Technology Platform driving model railway and slot car demand
* Airfix and Humbrol brands re-launched
* Vodafone McLaren Mercedes Team and Transformers licences boost slot car product sales
* Interim dividend of 2.7p proposed (2006 - 2.5p)

The model toy company said it expects the Vodafone McLaren Mercedes Team F1 Scalextric set - which costs between £100 and £250 - to become a best-seller this Christmas.

Frank Martin, chief executive, said: "There has been a huge resurgence in motor sport - literally driven by Lewis Hamilton. He's a great, young, iconic role model."

Scalextric sales in the UK climbed £1.8m in the six months to the end of September, while overall sales grew to £24.6m, the group said today, helping to boost pre-tax profits to £2.6m, up from £1.8m in the previous year.

Mr Martin said: "People thought we'd maxed out in the UK market because we dominate it so much - but last year's acquisitions Airfix and Humbrol have been extremely well received."

UK sales climbed from £13.1m to £17.3m in the period.

Outside the UK, Hornby has managed to penetrate the US market, securing a trading relationship with Toys R'Us for the first time - thanks to the success of its products linked to the Hollywood blockbuster Transformers.

However, Mr Martin said Hornby is not making a big push into the US - where growth is at its lowest level for the group.

Mr Martin said: "Our acquisitions in Spain and Italy are seeing the biggest growth - the brands were in trouble, so there was a massive undersupply on the market. We've reintroduced them and they are performing very well."

As the group looks towards the key Christmas period - when it makes 40pc of its sales - it expects to secure full-year sales of between £56m and £60m, up from £48m last year.

Mr Martin said it would be complacent to brush off worries of the current consumer squeeze. However, he said; "History tells us that toys at Christmas are the very last things to be sacrificed."

The group plans to pay an interim dividend of 2.7p on January 25. Shares in Hornby rose almost 4pc, up 9, to 252p.

Other news on trains:

Italy

Hornby Italia increased sales significantly in the half and is on track to
continue this trend in the second half. Very encouragingly, sales growth in
Italy is being derived not only from the re-launched model railway ranges under
the Lima and Rivarossi brands, but also from significantly increased sales of
Scalextric and Hornby branded products. In particular, the Thomas the Tank
Engine range is gaining wide popularity in Italy, as a result of regular
transmissions of the eponymous children's television series.

France

Hornby France increased sales at a lower rate than Italy and Spain, but, with
the majority of new launches of Jouef model railway products taking place in the
second half, we are looking forward to a strong full year performance in France.

Germany

Hornby Deutschland continues to establish itself as a credible supplier to this
important market, which is the largest model railway market in Europe. The
response to our re-launched Lima, Rivarossi and Arnold ranges has been good. It
is clear however that, given the competitive pressures in the market, great
emphasis will be placed on the successful launch of newly tooled products. In
this connection the first such product, a BR58 steam locomotive, will be
launched in Germany prior to Christmas 2007. This product features a die-cast

body for both locomotive and tender. This is the first time Hornby Group has
introduced such features.
 

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UK - 32%
US - 11%
Continent - 70%
37% overall.
It looks like Hornby's going to have a good year.
 

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* Turnover up by 37% to £24.6 million (2006 - £17.9 million)
* Pre-tax profits up to £2.6 million (2006 - £1.8 million)

Given the accepted norms for cost of sales for a Mfg/distribuion company that makes average gross margin on sales for hornby somewhere around 35~38%. Probably actually in excess of 50% if project Development and tooling costs are directly amortised rather than treated as asset.

Actually not overly excessive and to me its good that H are holding margin well as it ensures future development will continue be affordable and we can look forward to some good new releases in 2008!

* Airfix and Humbrol brands re-launched

Is there any sign in the UK marketplace of any positive changes in Humbrol as a result of the takeover - I've heard nothing???

* In particular, the Thomas the Tank Engine range is gaining wide popularity in Italy, as a result of regular transmissions of the eponymous children's television series.

I just can't imagine Ringo's voice in Italian :) :)

Regards

Richard
 

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Not clear how organic growth looks when acquisitions are stripped out. The big positives seem to be UK Scalextric, and Western Continental Europe (Spain/France/Italy). Germany is clearly still something of a struggle:

QUOTE Hornby Deutschland continues to establish itself as a credible supplier to this
important market

I'll have to check whether Humbrol is properly back on the shelves - having lost my local model shop recently it's more difficult to tell
 

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QUOTE (Doug @ 9 Nov 2007, 11:29) <{POST_SNAPBACK}>Hornby Deutschland ..newly tooled products. In
this connection the first such product, a BR58 steam locomotive, will be
launched in Germany prior to Christmas 2007. This product features a die-cast
body for both locomotive and tender. This is the first time Hornby Group has
introduced such features.
Who do we need to lobby at Hornby to get the message over that quality improvement would be welcomed by their loyal home market customers. Make a model of something 'every' UK modeller could justify, at the quality level required to win sales in Germany. The Black 5 is a bit tired, and the current model could be relegated to Railroad.
 

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QUOTE (Doug @ 9 Nov 2007, 14:51) <{POST_SNAPBACK}>Apparently Hornby are to move Airfix to India or China in next 2 years. A logical step it would seem.

I'm not so sure it is, after all a kit is purely an injection moulding, i wouldn't have thought it would cost a great deal more to keep production at Margate.

Regards
 

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It says a lot about the Hornby brand that a company with a small (in FTSE 100 terms) can get airtime on the Radio 4 Today programme business slot each time their results come out.

Profits for Hornby mean more British outline models for us all - I hope!

David
 

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It's great that Hornby is doing well. Let's hope the second model in the Hornby range to have a die cast body and chassis is a B12 or B17!!! One standard for the Germans, another for us?

Sadly I suspect that the current Hornby company has forgotten that its namesake forebear used to die cast almost every loco!!!
 

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QUOTE One standard for the Germans, another for us?
The german market has record of being prepared to pay. There were howls of anguish when some of Hornby's locos broke the £100 barrier and yet I don't think it took Bachmann very to sell their sound equipped 66s at well over that mark? I wonder if there is a sizeable "silent" core of modellers who will pay higher prices for quality that satisfies them. They don't make a fuss, they just get their wallets out.

David
 

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QUOTE There were howls of anguish when some of Hornby's locos broke the £100 barrier and yet I don't think it took Bachmann very to sell their sound equipped 66s at well over that mark?

I don't think people complain when they get value for money - and clearly a sound equipped loco beit a 20 or 66 is bringing an extra dimension to the hobby and therefore may be worth over £100. However the Hornby locos in question ,while being higer detailed, don't really bring anything else to the party. We seem just to be expected to pay more. In detail terms is there really that much of a diffirence between Vi Trains @ £50 and Hornby @ £85 (£105rrp). Personally I never run my diesels with open doors.

Russell
 

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QUOTE (dwb @ 10 Nov 2007, 15:47) <{POST_SNAPBACK}>I wonder if there is a sizeable "silent" core of modellers who will pay higher prices for quality that satisfies them. They don't make a fuss, they just get their wallets out.
Pretty sure that this is true. How often over the years have you heard or seen writtten 'switched to HO (US or European mainland) for the much superior product quality'. Bachmann had just got going in the UK market when I was able to consider resuming railway modelling. I purchased a B1 and did it up as Hitchin's 'Madoqua': with a few old Kirks, and Bach's mk1 suburbans behind it, the nostalgia got going. When the WD and 16T mineral appeared that swung it; up to that point my intentions had been US, with a Norfolk and Western theme. Now there is the RTR kit available to do a creditable ECML circa 1960, the unusual character items can be kit or scratch built to supplement the common vehicles required in quantity for a credible operation.

I would love to see a manufacturer put out some UK OO at Marklin or Roco standard to test the market; something really exquisite might well further broaden the appeal of model railways. I have seen friends surprised by the better quality now available, it has been enough to revive the dormant interest of a couple of them: one of whom decided against another Morgan, and is now seriously into O. If it is good enough, it will create a following.
 

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QUOTE (34C @ 9 Nov 2007, 18:13) <{POST_SNAPBACK}>The Black 5 is a bit tired, and the current model could be relegated to Railroad.
The one that was completely re-tooled only a few years ago and won many plaudits at the time?


Regards,

Dan
 

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QUOTE However the Hornby locos in question ,while being higher detailed, don't really bring anything else to the party. We seem just to be expected to pay more. In detail terms is there really that much of a diffirence between Vi Trains @ £50 and Hornby @ £85 (£105rrp).

One does classes I want , with a better build quality, and a little better mechanically. The other doesn't, seems unlikely to, and seems to think a limited edition certificate and a shelfful of paint colours are substitutes.

Hornby's 60 is routinely cited as the best 4mm diesel yet. Rail Express (of all people) described the Vi-Trains 37/4 as "significantly flawed" and uncorrectably so this month, and there is a better model of the type out there

I need a 101 and some 153s . I'd happily buy an ROD , a B12, or a Buckjumper. I already have 31s, Turbostar, 156, 158 and a rather nice 108. I'm afraid I can't see ViTrains bringing these or anything else that interests me to the party. Hornby and Bachmann, in contrast, do. Nor am I expecting Vi-Trains to do anything better than Bachmann have already done it.

And to return to topic, I'd rather Hornby stuck to injection moulded plastic . Its far easier for the modeller to work with and the last two diecast 4mm diesels were Hornby-Dublo's Co-Bo and 3/4 length Deltic . Not exactly the best precedents
 

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QUOTE (dwb @ 11 Nov 2007, 02:47) <{POST_SNAPBACK}>The german market has record of being prepared to pay. There were howls of anguish when some of Hornby's locos broke the £100 barrier and yet I don't think it took Bachmann very to sell their sound equipped 66s at well over that mark? I wonder if there is a sizeable "silent" core of modellers who will pay higher prices for quality that satisfies them. They don't make a fuss, they just get their wallets out.

David
There is certainly a silent core of potential buyers. The ones who are most vocal are those not prepared to pay for a superior product. I am one of the guys who switched to German and US product because of the superior quality and would like to see UK product made to that standard. Bachmann are currently the closest, Hornby are a long way off and will probably remain so in terms of the UK market because of their budgetary restrictions. I was advised that they aim for a maximum price of any product (obviously not including train sets) to be 120 quid. You wouldn't be able to make and sell a Trix, Roco standard loco for that amount.

Bachmann is the company prepared to take risks and try new things, I beleive that they will introduce Continental standard locos first. Their recent sound locos are quite good and have continental standard sound decoders, they are pretty close to continental standards locos in many respects. Before these sound locos were introduced many said that their was no room in the UK market for locos such as that and they have been proved wrong. The sound locos have sold pretty quickly showing that there is a market for improved quality and features and people will pay for it.
 

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Do we need to seperate quality and features?


Sound decoders are normally around £90 or more. UK modellers see a lot of value in paying £125 or whatever for a Bachmann loco with a sound decoder fitted. This is a value thing not a quality thing.

And in terms of sales the volumes for Bachmann sound are still small relatively speaking. There may be a silent core of UK modellers who are prepared to pay £200 for a loco but are they large enough in number to justify an investment of £200,000 or more?

The German market is 6 times larger than the UK market according to Hornby and therefore a £200,000 investment in a high priced German loco is less of a risk. German HO locos also have a wide appeal in the USA relative to British OO locos and this should not be overlooked!

Hornby are not stupid and if the Hornby diecast loco prooves to be a success worldwide then expect more!

Happy modleling
Gary

PS good point by Ravenser. Plastic is better to work with when detailing or modifying. Does this mean that the Germans don't normally modify and run things as they come unaltered? Unlike the British who seem to alter every model they purchase!

Diecast bodies would kill off the UK white metal cottage industry businesses. Do we want that?


To be brutally honest I am not too sure that Hornby (or Bachmann) would want to do that. It would be a fundemental change to the traditional way of things in the UK.
 

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The cost of locos is certainly a "talking" point.
If it seems that UK modellers are not keen on paying money for quality ' Quote
" There were howls of anguish when some of Hornby's locos broke the £100 barrier"
yet over here in Australia, the standard diesel model with all wheel drive & pickup is well over the £100 & there does not appear to be complaints about the prices & surely the sales of models here must be smaller than ther UK market.
 

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QUOTE PS good point by Ravenser. Plastic is better to work with when detailing or modifying. Does this mean that the Germans don't normally modify and run things as they come unaltered? Unlike the British who seem to alter every model they purchase!

Diecast bodies would kill off the UK white metal cottage industry businesses. Do we want that?

The German modellers generaly don't have to modify their locos as they tend to come accurate and ready to run.

QUOTE Sound decoders are normally around £90 or more. Only if you buy them from the UK. If you buy them from Germany then they are 90 euro retail. If you are Bachmann or Roco or who ever you would buy them in bulk direct from ESU at a far cheaper discounted price.
 
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