Hornby goes full steam ahead

The names Scalextric and Hornby still evoke happy memories of singed plastic and multiple pile-ups after taking corners too fast ­ only slightly tinged by the frustration of not having the necessary piece of track to complete that double-looped layout with chicane.

It seems boys will be boys ­ in some cases well into adulthood. Hornby, the name behind both brands, certainly seems to be benefiting from the Peter Pan factor.

It was full steam ahead last week with the company releasing figures that suggest it is again on track for good times ahead ­ bringing smiles to the faces of the grown-up boys and girls in the City.

Hornby's pre-tax profits were up from £1.4m to £2.3m before a £797,000 exceptional charge for redundancy costs. Sales were also up from £21.5m to £24.6m ­ suggesting that the company is shifting a few signal points and stationmaster's huts.

Not surprisingly the company's success drew comparisons with the failure of Railtrack's management to run the full-scale rail network and turn a profit.

Hornby says the growing popularity of motorsport has helped Scalextric sales among adults.

Scalextric is also motoring in the US. After its acquisition of American distributor A Day at the Races two years ago, and moving into production of US Nascar models, the group now says it expects the US market to contribute sales of between £2m and £3m.

But Hornby chief executive Frank Martin ­ drafted in last year from enamel paint company Humbrol ­ is also riding the train put in motion by Peter Newey, who stepped down as chairman and chief executive shortly before Christmas. During his four-year tenure, the company's former driver instigated many of the changes that got the engine rolling again. Non-core businesses ­ soft toys and action figures ­ were axed.

Under Mr Martin's leadership the company has pressed on with a programme of redundancies and shut its offices in London and Hong Kong. In the past year the company has also benefited from cheaper labour and production costs by outsourcing almost all of its production from its base in Margate to the Far East.

The move may have had adult jumper-wearing, pipe-smoking model train enthusiasts muttering into their cocoa, but anecdotal evidence suggests that the finished products are now of better quality than those made in the UK.

Radical action had been needed for some time. Despite the company's "Dublo" heritage, Hornby has been in danger of becoming derailed on several occasions in its recent history. The brand changed hands twice in the 1960s and 1970s. Last year, after it announced a series of job losses, its future was again threatened when it failed in a bid to find a buyer.

In recent years Hornby sales have also been hit by the popularity of new toys like PlayStation. Now Mr Martin says the company is looking to hit back ­ by developing, among other things, a new hi-tech PC-linked system for Scalextric, enabling players from round the world to play each other.

If the new initiatives prove popular the company famous for its "00" gauge model railways may be able to add some more 00s to its balance sheet in the future ­ and we could yet see a few more model train buffs in the City alongside the boy racers.