Live Steam, oil prices and Marks and Sparks

From AFX news agency
Hornby CEO sees no adverse impact from Marks & Spencer developments by Rob Branch
Hornby PLC chief executive Frank Martin said the UK toy group's
deal with Marks and Spencer Group PLC formed a key element of its strategy but played down worries over the implications of a possible takeover of the high street retailer.
'Marks and Spencer is very important for us strategically. Obviously having traded with them for just one year, we'd hope that would continue for many years to come,' Martin told AFX News in an interview.
Hornby last year signed a concessionary deal with M&S to sell its model train and Scalextric slot car racing sets, in a number of the retailer's stores.
But Martin pointed out that Hornby products represent an 'infinitesimally' small part of M&S' total business.
As such, he said: 'In the short term I would not envisage any negative impact from that.'
Hornby said the deal generates less than 5 pct of its total turnover.
It nonetheless added that the range of its products sold in M&S stores had doubled since the contract was signed last June.
Philip Green, the Monaco-based retail entrepreneur, yesterday made an indicative bid approach for M&S, and has signalled he may look to re-negotiate some of the retailer's supply agreements should he launch a formal takeover offer and win control.
Martin went on to downplay worries UK consumers may begin to tighten their purse strings in response to a series of interest rate hikes and record oil prices.
'We are a hobby business primarily. It seems that from previous experience hobbies are the last thing on the list to suffer,' the chief executive said.
He said Hornby, which earlier this year bought Spain's Electrotren, and is in the process of acquiring parts of Italian toy group Lima SpA, sees scope for further sector consolidation.
'There are lots of them (potential acquisition targets),' Martin said.
With the European marketplace still highly fragmented, 'there is actually an opportunity, on the right terms of course, to build a worldwide hobby business'.
Martin said the Lima deal could conclude as early as September, three months ahead of earlier guidance.
The company is expecting to sell 8,000 of its 'Live Steam' train sets in the current financial year to March 2005, up from 4,000 last time.
Martin said that would equate to revenues of about 2.5 mln stg, or 6.4 pct of last year's sales.
His comments came after Hornby reported a 20 pct increase in year to March 31, 2004 pretax profit of 6.5 mln stg.
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