amended: Corrects 13th para to say the company expected dilution in fourth-quarter earnings; replaces "earnings" with "dilution".
Monday, games and toys maker Hasbro Inc. (HAS) posted an improved profit for the third quarter, aided by increasing demand for Transformers and G.I. Joe toys.
The Pawtucket, Rhode Island-based company company's third-quarter net income was $150.4 million or $0.99 per share, compared to $138.2 million or $0.89 per share in the year-ago quarter.
On average, 15 analysts polled by Thomson Reuters expected the company to post earnings of $0.93 per share. Analysts' estimates typically exclude special items.
The company noted that the latest quarter results included a $0.03 per share dilutive impact from the company's investment in its joint venture with Discovery Communications and initial investments in Hasbro's virtual studio.
On an adjusted basis, net income advanced to $151.4 million from $139.3 million earned in the same quarter of last year.
Quarterly net revenues totaled $1.28 billion, 2% lower than the previous year's $1.30 billion, and fell shy of ten Wall Street analysts' consensus revenue estimate of $1.32 billion for the quarter. Net revenues improved 1%, excluding the negative $36.0 million impact of foreign exchange.
Brian Goldner, President and Chief Executive Officer, said, "Hasbro performed well in what is continuing to be a challenging global environment. We grew revenues absent the impact of foreign exchange and we grew earnings and earnings per share including the dilution from the investments we are making in our joint venture with Discovery Communications and Hasbro's virtual studio."
The company's U.S. and Canada segment generated third-quarter external net revenues of $791.9 million, a decline of 4% from $821.0 million a year ago, reflecting a strong performance in the boys category, offset by declines in girls, preschool and the games and puzzles category. Segment operating profit was $129.1 million, compared to $131.9 million in 2008.
International segment revenue were also down 4% to $444.1 million from last year's $460.6 million. Revenues grew 4% in the absence of a negative foreign exchange impact of $34.3 million. The results reflected growth in boys and preschool categories offset by declines in the girls and the games and puzzles category. Operating profit for this segment totaled $64.1 million, down from $65.8 million last year.
External net revenues at Entertainment and Licensing segment amounted to $41.6 million, a jump of 127% from the prior-year's revenue of $18.3 million. Hasbro attributed the strong revenue growth at this segment to increases in TRANSFORMERS and G.I. JOE. Segment operating profit totaled $19.8 million, compared to $6.3 million a year earlier. The Entertainment and Licensing segment includes television, movies, lifestyle and digital licensing and on-line entertainment operations.
For the nine-month period, the company reported net income of $209.4 million or $1.39 per share, compared to $213.2 million or $1.39 per share in the prior-year period. Adjusted net earnings decreased to $212.6 million from $216.4 million in the corresponding period of last year.
Net revenues for the nine months ended September 27, 2009 were $2.69 billion, down from $2.79 billion reported in the comparable period of the previous year.
Looking forward to the fourth quarter, the company projects dilution in the range of $0.04 - $0.05 per share, due to the investment in the joint venture with Discovery Communications and Hasbro's virtual studio. For 2010, the dilution estimate is still expected to be in the range of $0.25 - $0.30 per share. Analysts are looking for earnings of $0.80 per share for the fourth quarter, and $2.12 per share for the full year.
Further, the company stated that it believes it could grow revenues in 2009, if consumer retail takeaway continues to improve in line with recent fourth quarter trends. Hasbro also continues to believe that the underlying strength of its brands and commitment to its strategy would enable the company to grow earnings per share in 2009, including the expected dilution from television investment.
Deborah Thomas, Chief Financial Officer, commented, "As we look to the remainder of the year, we are well positioned with a broad-based portfolio that is both innovative and priced right for today's value oriented consumer. We will also continue to focus on managing our business efficiently while investing for the long term."
Among Hasbro's rivals, Mattel Inc. (MAT) posted a lower profit for the third quarter that totaled $229.8 million or $0.63 per share, compared to $238.1 million or $0.65 per share in the year-ago quarter, reflecting lower sales, as the weak economy dampened demand for its Fisher-Price and Barbie brands. Quarterly net sales dropped 8% to $1.79 billion from $1.95 billion in the previous year.
Hasbro shares, which have been trading between $21.14 and $31.05 in the past 52 weeks, closed Friday's regular trading session at $29.52.
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