Batman, Barbie and cost cuts lift Mattel profit
By Dhanya Skariachan
(Reuters) - Mattel Inc (MAT.O: Quote) reported a higher-than-expected quarterly profit on Tuesday and shares rose as much as 11.4 percent as the world's largest toymaker kept a tight lid on costs and got a boost from Batman and Barbie.
The second quarter is typically a weak one for toy makers as they gear up for the holiday selling season when many of them make more than a third of their sales. Economic weakness, especially in Europe, also threatened to weigh on sales.
"We are very pleased to see the toy category essentially flat in Europe," Mattel Chief Executive Bryan Stockton told analysts on a conference call, adding that he expects the industry environment to remain cautious in the second half of the year.
Mattel, home to brands such as Barbie, Hot Wheels and Fisher-Price, said second-quarter net income rose to $96.2 million, or 28 cents a share, from $80.5 million or 23 cents a share a year earlier. Analysts on average were expecting a profit of 21 cents a share, according to Thomson Reuters I/B/E/S.
Sales were flat at $1.16 billion, while analysts expected $1.13 billion. The results suffered from the stronger dollar, which brings down the value of exported goods by U.S. companies.
Sales of Barbie dolls and accessories rose 5 percent while the company also said it saw momentum behind toys related to the "Batman - the Dark Knight Rises" movie, which is being released this week.
Mattel also partly offset the effect of unfavorable currency exchange rates by spending less on making and advertising its products.
"They have done a good job with their Operational Excellence 2.0 program to evaluate their overall business, cut expenses where possible," said MKM Partners analyst Eric Handler, who has a "neutral" rating on Mattel stock. "They are on track to save about $175 million over a two-year period." Continued...