Hasbro Third-Quarter Profit Rises 10% Helped by 'Transformers: Dark of the Moon' Business

NEW YORK - Toy giant Hasbro on Monday reported a 10 percent gain in third-quarter earnings driven in part by higher entertainment and licensing unit profit.

The company said its quarterly profit of $171.0 million compared with $155.2 million in the year-ago period. Revenue rose 5 percent to $1.38 billion, a record for the quarter. The quarterly results came in below the average Wall Street expectations, but the company said it

Entertainment and licensing segment revenue rose 69 percent to $46.3 million driven by growth in licensing revenue associated with the sale of TV programming globally, as well as movie and merchandise revenue tied to Transformers: Dark of the Moon, plus a $5 million one-time payment from studio partner Universal Studios. Entertainment and licensing segment profit nearly tripled to $15.3 million.

But Hasbro reported declines in its boys, girls and games and puzzles businesses.

Transformers toy sales this year are currently trending to come in between the company's results for the past two Transformers movie years - $482 million in 2007 and $592 milllion in 2009 - after a somewhat slower start due to a lower benefit from collector purchases, Hasbro president and CEO Brian Goldner said on a conference call Monday. He added that the brand has been "a major contributor" to revenue growth and that shipments are up more than 100 percent in some markets.

But Marvel and Star Wars toy sales for the year are trending lower compared to 2010, management said.
 
On a conference call with analysts, he also said that Hasbro continues to develop entertainment projects based on its brands - despite some delays. "We continue to actively develop a number of additional Hasbro films with great partners and writers, including Micronauts, Ouija, Candyland, Risk, Stretch Armstrong, Clue and Monopoly," he said.

In 2012, Hasbro brands-based films include Battleship by Universal Pictures and Paramount's GI Joe sequel. Goldner said Monday that the company's toy sales should also benefit from the 2012 releases of The Avengers, a 3D version of the first episode of Star Wars and The Amazing Spider-Man.

Hasbro's portion of the third-quarter loss of kids cable network The Hub amounted to $1.5 million, compared with a loss of around $875,000 in the year-ago period, the company said. But Goldner lauded the channel, a joint venture with Discovery Communications, for having its best quarter in the third quarter with 24 percent ratings growth among kids 2-11 compared with the second quarter.

He wouldn't comment on whether the channel could break even next year, but he highlighted it is making "great progress."

Management cited higher My Little Pony toy sales in the U.S., Canada and more recently the U.K. after the launch of Hasbro TV programming in those markets. Goldner said the trends show "the Importance of television to driving our brands in the international markets."

"We continue to expect to deliver meaningful growth in both revenues and earnings per share for the full-year 2011 versus our 2010 reported full-year results," said Goldner looking ahead. "Our performance this year demonstrates we are successfully executing our strategy globally." And he said early fourth-quarter are positive, positioning Hasbro well for the key holiday season.
 

Email: Georg.Szalai@thr.com
Twitter: @georgszalai