Model train manufacturer Hornby hits emergency brake

British model train manufacturer Hornby is in a rut: a profit alert halved its share value, as the company is facing a 6 million pound (7.7 million euro) record loss, much more than previously anticipated.

Loss triples previous forecasts

Hornby’s management released a trading update yesterday, saying it expects the loss to be so large it may not be able to pay its debtors as promised.

The model train manufacturer already warned in November 2015 that it would have an onerous full fiscal year, but it estimated a 2 million pound (2.6 million euro) loss. However, disappointing January sales and a write-off of old supplies because of a rigorous restructuring plan, could triple that loss.

This means Hornby is suffering the same faith as its German competitors, Fleischmann and Märklin, as the latter was nearing bankruptcy in 2009 and was saved by Germany’s largest toy manufacturer, Simba Dickie. Fleischmann suffered a similar fate and joined its Austrian competitor Roco. The reason is always the same: the waning popularity of models, which has led to the demise of other manufacturers.

Hornby has made electric model trains since the 1920’s, after British inventor Frank Hornby founded the company in 1901. He was also the man behind the famous toy brands Meccano and Dinky Toys. Hornby itself not only makes model trains, but also Scalextric car tracks, Airfix model construction kits and Corgi Thunderbirds toys. It has been listed on the London stock exchange since 1986, but suffered a huge loss yesterday, dropping 50 % in value.