Hornby axes dividend as dollar slide bites

13th Nov 2009 07:34

Scalextric and model train set group Hornby has chopped its interim dividend citing the weaker sterling/dollar exchange rate, which has hit its profit and cash generation potential.Sales in the six months to September rose by 5% to £25.5m, but profits fell to £743,000 from £1.81m as margins came under pressure. The group says this was primarily as a result of the weakness of the pound versus the US and Hong Kong Dollar. "As a result of these currency effects and higher ex factory prices our landed costs have increased at a faster rate than we have been able to increase our selling prices," Hornby added.On a brighter note, Hornby said it has largely resolved its supply chain issues. "We now have much greater clarity on the management of the supply chain processes and the volume of shipments from China has been increasing on a weekly basis. This leaves us well placed as we enter the Christmas trading period," it said. The recent success of the Brawn Formula One team and Jenson Button's World Championship victory are expected to provide a significant boost to the sales of Scalextric and Micro Scalextric, the statement said."Current trading continues to be challenging, but we have the right products and the right distribution network to maximise our performance during these difficult times," chairman Neil Johnson added.