Shares in Hornby, the British manufacturer of iconic model railway sets, tumbled over 15 per cent this morning after it flagged a dip in sales due to Red Sea ship attacks.
The firm said group sales for the fourth quarter were eight per cent less than the same period last year, as high value container deliveries were pushed back into April.
Sales for the full financial year were £56.2m, only a marginal two per cent ahead of the prior year figure.
Conflict in the Red Sea began in November last year after Iran-backed Houthi rebels launched attacks in the Suez Canal, one of the world’s key trade routes. Container shipping firm have been forced to re-route around the Cape of Good Hope in response, adding weeks to voyage times.
The fall in sales comes after an already challenging period for Hornby. The Kent-based firm saw losses mount in its half-year results amid a slower ramp up in demand headed into Christmas and inflationary pressure.
This comes as Frasers Group head Mike Ashley has been significantly upping his stake in Hornby since February, when it acquired more than 11 million shares in the Kent-based company, taking its total holdings to more than 15 million, or 8.9 per cent. In March he stepped up involvement becoming a consultant to its chief executive.
Last month it made its first acquisition since Frasers got more heavily involved.
“Our underlying loss before tax has weakened since the half-year point,” the company said in a statement on the London Stock Exchange.
“Nonetheless, this still represents a slight improvement in second half profitability compared to the previous year, despite facing higher interest rate charges on borrowings and increased tooling amortisation.”
The company closed the year in a loss-making position, hampered by a high debt and inventory costs.
Net debt as of 31 March was £14.3m, more than double a prior year figure of £5.5m but still a slight improvement from the £14.6m reported at the half year mark.
Its inventory of stock has reduced by 12 per cent in the same period, and is slightly lower than March 2023.
Hornby said it remained “cautious” in its outlook amid the uncertainty of “wider economic and socio-political factors affecting all businesses at this time.” It will announce preliminary results for the year ended 31 March in June.