Just three months after celebrating its return to profit model railway brand Hornby (HRN:AIM) has warned that trading disruption and a supply delay will lead to lower year-on-year revenues in the first half.

The £58 million cap, which moved from the Main Market to AIM last month, says European sales are currently being impacted by ongoing problems with the supply of international model rail.

Trading in the UK in July and August was also affected by roll-out of Hornby’s new IT system and the ‘weaker general retail environment’.

Hornby says its first half group revenue will be lower than the prior year, sending its shares down 1.4% to 104p.

HORNBY - Comparison Line Chart (Rebased to first)

Trading in the UK is now back to levels which are higher than last year and manufacturing production for trains and Scalextric is ahead of plan.

‘While it is difficult to forecast accurately the full extent of further expected disruption during the ongoing roll-out we are confident that the full year financial result will show progress on last year,’ Hornby says.

The news is a blow for Hornby, which managed to deliver an annual pre-tax profit for the first time in three years in FY2015 after it fixed supply problems in China and boosted sales of its model railway products. It has been through a tough few years due to disappointing sales of London 2012 Olympic merchandise and the collapse of its largest single customer Modelzone in 2013.

The group’s turnaround is proving challenging and the latest disruptions are likely to lead to share price weakness in the short-term after gaining 33% in the year to date.

Issue Date: 16 Sep 2015