Hasbro Posts Unchanged Fourth-Quarter Profit Amid Weak Holiday Season Demand
UPDATED: "Transformers"-driven entertainment-related financials helped drive results, even though the franchise's revenue for 2011 came in at the low end of the toy giant's expectations.
NEW YORK - Hasbro on Monday reported nearly unchanged fourth-quarter earnings amid a challenging holiday season in the U.S. and Canada.
The toy giant posted a quarterly profit of $139.1 million, compared with $140.0 million in the year-ago period. Earnings per share rose though amid continued stock buybacks. Revenue rose 4 percent to $1.33 billion. Foreign exchange factors had a $13.3 million negative impact on revenues in the quarter.
Hasbro’s entertainment and licensing business was a key pocket of strength driven by films, TV shows and toys, including from Transformers: Dark of The Moon. Revenue in the unit rose 20 percent, with its operating profit up 44 percent to $21.5 million.
Hasbro previously had warned that its full-year results would fall short of Wall Street expectations amid weaker-than-hoped momentum in North America late in the year. It cited Transformers toys and movie revenue as a key driver of its full-year figures, but said the franchise's revenue, while up 85 percent from the previous year, came in at the low end of the company's target range. Management previously had said Transformers revenue for 2011 was 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.
Hasbro's 50 percent stake in the loss of kids TV netwok joint venture The Hub, a partnership with Discovery Communications, amounted to $7.3 million in 2011, but on an earnings before interest, taxes, depreciation and amortization basis, the channel was in positive territory, management said.
President and CEO Brian Goldner cited strong international growth in 2011. "However, we did not meet our expectations for growth in the U.S. and Canada segment, as we experienced weaker demand than we had anticipated, especially post-Thanksgiving," especially in the games and puzzles fields, he said. "We have taken significant steps by putting new leadership and new plans in place to re-accelerate growth and innovation in both of these important areas."
Discussing Hasbro's film strategy, he lauded a recent agreement with Relativity Media to release Stretch Armstrong in 2014, based on a brand that the firm has not actively marketed for nearly 20 years. This should mean "incremental revenue and profits," Goldner said. He also lauded a recent deal for Candyland and said his team is "pleased to expand our relationship with Sony," which is also developing a film based on the game Risk.
Talking about 2012 film releases, he touted Battleship and the G.I. Joe sequel. Overall, Hasbro now is working with four major studio partners. Goldner said that gives the company "access to amazing talent and tremendous resources."
Goldner said Hasbro has no current plans to self-finance movies.