Market Watch: Hornby hopes for model performance

MODEL maker Hornby is putting the finishing touches to its annual results having only recently upped City expectations on the back of a strong final quarter.

The collectibles firm, which owns Airfix and Scalextric, cheered the market with news it is to pay a dividend this summer after the better-than-expected finish to the year.

The sales performance at Hornby – which also owns Humbrol and Corgi – has made a marked recovery over the past six months as consumer confidence returned. The group said on increasing its profit guidance late last month that there remained "some uncertainty" over the consumer spending picture for 2010.

But it stressed order intake had continued strongly across all its brands.

Numis Securities increased its pre-tax profits forecast to 5.7 million, up from 5m, ahead of Friday's results.

This would still come in lower than the 6.3m reported a year earlier, but follows a tough year for consumer spending and reveals the impact of a weak pound.

The UK's biggest tile and flooring chain reports interim figures on Wednesday, but has already warned of subdued trading in the half-year amid faltering consumer confidence.

Topps Tiles said in March that interim like-for-like sales growth was expected to be far below levels seen at the start of the period after a marked slowdown since January.

It guided for sales up 2.1 per cent for the 27 weeks to 2 April – less than half the 5.5 per cent growth seen after 14 weeks of the first half.

Extreme weather at the start of the year impacted sales, while consumer caution has also been hitting demand.

Analysts trimmed forecasts as a result of the downbeat update in March, with Kate Calvert at Shore Capital wiping 20 per cent off its full-year profit estimates, to 17.2m. Other analysts believe profits could well fail to lift from the 16.3m a year earlier.

Northern Foods – which makes Fox's biscuits and Goodfella's pizzas – delivers full-year results on Tuesday, but the market will be keen for an update on current trading after recent advertising efforts.

The group has launched a multi-million-pound TV-backed relaunch for its Goodfella's pizza range after losing further market share to rival Chicago Town.

The advertising campaign started last month, with new recipes and packaging also designed to boost the brand.

Revenues for the full year rose 1 per cent across the group, helped by a robust result in the bakery division, which reported sales up 3 per cent.

Consensus forecasts are for annual operating profits to rise 3 per cent to 54.3m.

The City will also be looking for early feedback on Northern's new contract to supply BA with food on its short-haul routes from Heathrow. The contract started on a phased basis in March, with Northern taking over the full supply from Gate Gourmet in June.

Week ahead

TOMORROW

Market closed

TUESDAY

Northern Foods, Ryanair (finals)

WEDNESDAY

New Look, Northumbrian Water (finals); Topps Tiles (interims); AG Barr (trading update)

THURSDAY

Johnson Matthey, Quintain Estates & Development (finals); Kingfisher (trading update); Morrisons (AGM); British Airways passenger figures

FRIDAY

Hornby (finals)