Hasbro profit jumps 77%, raises outlook

Reuters
February 08, 2010

Hasbro Inc. posted a stronger-than-expected quarterly profit of $165.6 million US on demand for toys tied to the Transformers movie and board games, and said it expected both revenue and earnings to rise in 2010, sending its shares up.

The No. 2 toymaker behind Mattel Inc. hopes to benefit from its joint venture with Discovery Communications Inc. to form a new children's television network -- The Hub -- and the creation of Hasbro Studios.

"2010 guidance is pleasantly surprising," Timothy Conder, an analyst with Wells Fargo, said in an e-mail.

Conder said the announcement for the autumn 2010 line-up for The Hub could be an additional catalyst for shares as "investors will then be able to benchmark a base for growth of this venture going forward."

Some investors are already bullish about the joint venture and expect it to give Hasbro a big boost in 2011.

Hasbro also sees its presence in emerging markets and key long-term licenses aiding future growth.

The strong results came a week after rival Mattel forecast a strong 2010 from new toy lines and renewed demand for its Barbie dolls, but failed to excite investors who worried if higher labour costs could limit its gross margin growth.

"Overall, the fourth quarter was very good and was much better than we envisioned even factoring in what were clearly market share gains in action figures and games/puzzles," Conder said.

Hasbro's fourth-quarter net profit rose to $165.6 million, or $1.09 a share, from $93.6 million, or 62 cents a share, a year earlier.

Analysts on average were expecting earnings of 81 cents a share, according to Thomson Reuters I/B/E/S.

Net revenue rose 12 percent to $1.38 billion, beating the analysts' average forecast of $1.34 billion. Revenue from the boys' segment rose 16 percent in the quarter.
  
NEW VENTURES

2010 is an "entertainment-light" year for Hasbro as it will have toys tied to the releases of only two movies – Iron Man 2 and Toy Story 3.

However, it has a bigger entertainment lineup in 2011, with Stretch Armstrong, Spider-Man 4, Transformers 3 and The First Avenger: Captain America.

Last December, Hasbro also signed a 10-year deal to make and sell toys and games based on characters in the American children's television series Sesame Street.

Hasbro's deal with Sesame Workshop, the nonprofit organization behind Sesame Street, will include popular characters such as Elmo, Big Bird, Abby Cadabby and Cookie Monster.

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