Hobby products play Hornby enters the Christmas period in good cheer, having delivered racy interim figures to September. Broadening its product appeal and building businesses across a range of territories, chief executive Frank Martin announced a 37% turnover increase to £24.6m and a strong pre-tax profits rise to £2.7m (£1.4m). The interim dividend was increased to 2.7p (2.5p).

Performance drivers included increased uptake of digital control technology within Hornby railways and Scalextric car racing sets, new product introductions and a positive profit contribution from the complementary Airfix and Humbrol business acquired last year. Alongside growth in the UK, Martin flagged up impressive progress overseas, where Hornby’s revitalised European businesses are expected to drive growth over the next five years. Hornby America enjoyed an 11% sales increase in dollar terms, buoyed by products tied to movie blockbuster Transformers, though the depleted dollar reduced growth to a meagre 2% on translation into sterling.

With the key Christmas selling season underway, demand for Scalextric is being boosted by a Lewis Hamilton-inspired surge in Formula 1 interest. Martin says ranges linked to the group’s licence with the Vodafone McLaren Mercedes Team ‘are set to become best-sellers’.

Furthermore, second-half gross margin improvement is predicted. Recent rising sales of Hornby and Scalextric sets, sold through major retailers and via export, had a short-term negative impact on margin, but they should lead to improved, higher margin accessory sales as new hobbyists expand their collections.

Trading on a historic price to earnings ratio of 16 times, offering solid yield appeal and now a real force in the global hobby market, Hornby is a strong buy.

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Hornby	LSE	£40.27m	106.00p	0.00p
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