Beleaguered toy maker Hornby (HRN:AIM) has launched a desperate bid to return the company to profitability after swinging to an underlying pre-tax loss of £5.7 million in the year to 31 March.
The Scalextric and Airfix maker has issued four profit warnings over the past three years on the back of poor sales and an expensive restructuring plan that failed to bear fruit.
The £17.6 million cap, which has reported a further 4% drop in full-year sales, has revealed another turnaround plan which aims to strengthen its balance sheet, cut costs and focus the business on its core brands.
Hornby says the restructuring, which is reliant on it raising £8 million via a share placing, will move the company back to a position of sustainable profit and cash generation.
Hornby is cutting the number of product lines by 40%, exiting concession arrangements and reducing its high level of stock.
The plan is estimated to result in a 33% reduction in fixed costs, but revenues will be reduced by around a quarter.
Investors aren’t won over, with shares in Hornby slipping 0.8% to 31.8p. This is unsurprising given that its previous restructuring plan flopped.
The group faces an upwards battle in convincing the market that things will be better this time around.
