Slowdown forces Hornby to cut dividend Hornby is hoping that the enduring appeal of James Bond and Star Wars as well as the more youthful charms of Olly the Little White Van will help revive its fortunes, after a tough year of trading prompted the toymaker to cut its dividend. In 2010/11, the company, which makes Scalextric and Airfix model sets, maintained its dividend despite a fall in earnings. The renewed economic slowdown in Hornby's core British and European markets has forced the Kent-based company to issue two profit warnings since January, however, and while revenues rose slightly in the year to March 31, from £63.4m to £64.4m, pre-tax profits slipped from £4.1m to £4m. As a result, Hornby said that it would cut its full-year payout from 5p to 3.7p a share, payable from diluted earnings per share of 8.12p. The company's long-term policy is to pay out about 50 per cent of earnings. Shares in Hornby were up 4.05 per cent, however, after the company said sales of its London 2012 Olympics merchandise would boost profits in the short term. Frank Martin, chief executive, said he also expected the Olympic surge to provide longer-term benefits by increasing Hornby's presence in mass-market retail outlets. To exploit this opportunity, the company - which makes high-end train sets that sell for as much as £275 - has developed some new lower-price ranges, selling for between £2 and £10, such as a series of collectable pin-badges based on the Moshi Monsters online game. To the same end, it plans to bring to market a range of toys based on the highly popular children's television series Olly the Little White Van in the coming months. Hornby is also confident that a Star Wars-themed range of Scalextric racing sets and a number of products celebrating the 50th anniversary of the James Bond franchise will help improve its fortunes in the UK - which accounts for about 70 per cent of Hornby's business, and where sales dropped 4 per cent last year. "There is no doubt that there will continue to be pressure on consumer confidence for some time to come," said Mr Martin. However, we continue to innovate and to seek new commercial opportunities in order to counter the effects of the macroeconomic climate in which we are operating. The company also said that Neil Johnson would stand down as chairman by next year's annual meeting.