Hornby plots quick turnaround for Corgi

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The Independent Online

Airfix and Scalextric owner Hornby today revealed a 17 per cent jump in profits and said it was well advanced with its next project to revive car firm Corgi.

The model group recently spent £7.5 million on buying Corgi, which sold millions of cars at its peak but failed to make a profit last year.

Hornby chief executive Frank Martin said plans for a relaunch of the brand were well advanced, adding: "Corgi retailers and collectors are delighted that Hornby has taken over. We are confident that we will quickly rebuild sales, profits and market share."

Hornby, whose other brands include Airfix models and Scalextric toy car racing, posted a 17 per cent hike in pre-tax profits to £9 million for the year to March 31. Sales were 19 per cent ahead at £55.7 million.

Chairman Neil Johnson said he was confident of further growth this year despite a slower economy. "Notwithstanding the general economic downturn in many of the markets in which we operate, we are anticipating another year of good progress," he said.

Mr Martin said this financial year would see Hornby concentrate on securing Corgi's inventory supplies - a problem for the previous owner - and retailing he current range of products.

They include commercial vehicles such as Eddie Stobart trucks, London buses and heritage models like the Ford Anglia and MGB Roadster.

He said the Corgi business should break even on £7 million of sales in the year to March 2009 - which averages out at around 350,000 unit sales - and add £4 million of new revenues within the following three years.

As recently as 1999 it enjoyed a £20 million turnover and made £3 million of profits.

Possible new Corgi products in coming years could include Formula One racing cars, as well as earth moving and agricultural models, Mr Martin added.

He said the success of the Airfix business, bought in November 2006, showed older brands could be re-invigorated. Sales of Airfix models were around £5 million in the last financial year, well ahead of the group's £4 million forecast.

"That really demonstrates that long-standing brands if handled correctly have got a lot of life left in them," Mr Martin said.

He said he thought it was possible to get back to the days of multi-million unit sales for Corgi figures by focusing on children as well as the current adult collector market.

Scalextric sales grew by 23 per cent during the year thanks to bumper sales of digital-controlled sets - which allow more car control and lane changing - and a boost from the success of Formula One star Lewis Hamilton.

Railways sales grew by around 3 per cent, with the digital Virgin Trains Pendolino the best-selling locomotive.

Model train sales in the final quarter of the financial year were hit by delays in supplying European subsidiaries. It resulted in the firm warning investors that full year sales and profits would be lower. Hornby said steps had been taken to match product supply "more closely" to sales.