Hornby Plc (LON:HRN), the hobby products group behind a range of household brand names including Airfix, Corgi and Scalextric, enjoyed a sales boost of 5% to £64.7m in the year to March. Chief executive Frank Martin said the company had made “excellent progress”, with robust demand for products and a strong finish to the year as UK retailers scrambled to re-stock following brisk Christmas trading.

Underlying pre-tax profits were down 14% at £5.7m as the group suffered the effects of adverse hedged exchange rates from rates achieved in 2009 between Sterling and the Hong Kong Dollar, the currency in which most of Hornby’s purchases are made. Earlier in the year it also experienced heavy de-stocking among UK retailers and international distributors, but strong sales in December helped to drive up demand in the post-Christmas period. The performance was enough to trigger the resumption of dividend payments, with the 2010 figure set at 5.0p, up from 2.7p in 2009. The move was well received by investors, who nudged the shares up 1.3% to 135p.

In the UK, overall sales were up 7% to 46.5m, while sales in mainland Europe were also up although there was wide variation between countries. Italy had an excellent year, with revenues up 24% to £5.5m while subsidiaries in Spain, France and Germany all saw sales dip, due in part to the general economic climate, particularly in Spain. Sales in Hornby America were down 21% at $4.4m.

Elsewhere, Hornby said it had made progress in diversifying its supplier base, which is mainly based in China and India, via third-party contract manufacturers. In recent years the company has encountered costly problems caused by financial difficulties at its largest supplier. However, over the course of the past year, two alternative suppliers of model railway products have been brought in, which not only reduces Hornby’s dependence on one supplier but also provides more flexibility to increase production volumes if required.

Frank Martin said: “Looking forward, Hornby is in excellent shape. We have agreed a number of new exciting licenses including collaboration with Disney/Pixar to produce products associated with the new Toy Story 3 Movie. Importantly, we continue to introduce more merchandise associated with the London 2012 Olympic Games. We expect these product lines to perform well as we get closer to the games.”

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