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- Hornby said he planned to make £500,000 worth of cuts next year.
Horny actions fell more than 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 £18.9m at the end of the period, up from £14.8m at the same time a year ago.
Hornby said job cuts and a restructuring in September had cut £1m from its annualized central cost base, “with a further £500,000 coming out in 2025”.
The group reported smaller operating losses for the first half of its financial year as its recovery continued, advised by Sports Direct founder Mike Ashley.
Hornby said revenue rose 10 per cent to £25m for the six months ending September 30, with underlying losses falling slightly to £3.8m, from £4.1m a year ago.
The group’s pre-tax statutory losses reached £5.1m, compared to a previous loss of £4.9m.
Stock drop: London-listed Hornby shares fell more than 13% on Wednesday
Hornby shares fell 13.08 per cent or 3.4 pence to 22.60 pence on Wednesday, having risen more than 40 per cent in the last year.
Chief executive Olly Raeburn said: “We have enjoyed top-line revenue growth for five years running, but our return to profitability has been held back, in part, by a core cost base that has grown disproportionately at over the years and is suitable for a larger business.
He added: “In the first half of 2024 we spent a lot of time analyzing structures and costs across the organization and in September we implemented a significant reduction in headcount at the Margate head office.
“We continue to review our core overheads and cost base as a whole, and there are a number of active initiatives in play that will have an even greater and positive impact on this figure going forward.”
Raeburn said strategic and structural changes aimed at operational efficiency and cost savings may not have an impact until the next financial year, adding: “We are firmly focused on right-sizing the business for sustainable growth.”
He said: “Revenue performance compared to last year has been strong and we exited the half year with a clear and aggressive plan to maintain that momentum during the critical Black Friday and Christmas trading periods.”
Hornby’s digital revenue increased 12 percent compared to the same period in 2023 and 45 percent compared to the first half of 2022.
Earlier this month, Hornby revealed it had agreed to sell a loss-making subsidiary that makes Oxford Diecast models.
The Margate-based company told shareholders it has signed a conditional agreement to sell its LCD Enterprises business to EKD Enterprises.
EKD, a company owned by former chairman and current non-executive director Lyndon Davies and his family, will pay £1.38 million for the deal.
With the sale, EKD will 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 pre-tax loss of around £200,000 for the year to March 31.
In March this year, Mike Ashley said he would advise Hornby after taking a stake in the model railway specialist.
The toy company said the founder and majority owner of the Frasers Group “entered into a consultancy agreement” as it seeks a financial recovery.
Russ Mould, investment director at AJ Bell, said: “You could hardly say the Hornby toy company’s turnaround is going like clockwork.”
‘The company continues to rack up losses, which only adds pressure ahead of its key trading update.
‘You’ll be praying that your model railways fill the stockings of big and little kids alike when the big day comes. A decent Christmas could give the recovery some momentum ahead of a planned realignment of its logistics setup in 2025, which is expected to help reduce costs.
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