BENGALURU: US toymaker Hasbro, Inc., (Hasbro) reported a 5 percent revenue growth in Q1-2015 (quarter ended March 31, 2015, current quarter) to US$ 713.5 million as compared to the US$ 679.5 million in the corresponding year ago quarter. Foreign exchange negatively impacted revenue to the extent of US$ 62.6 million, else revenues would have increased 14 percent says the company.
Net earnings for Q1-2015 declined 16.8 percent to US$ 26.7 percent as compared to the US$ 32.1 million in Q4-2014. However, on considering a favourable tax adjustment of US$ 13.5 million in Q1-2014, net earnings in Q1-2015 improved 43.5 percent.
Company Speak
“2015 is off to a good start with continued momentum in our business, led by growth in all of our Franchise Brands and the underlying strength in demand across international markets, including the emerging markets,” said Hasbro’s president and CEO Brian Goldner. “For the first quarter, we grew revenue, improved profitability and delivered growth in adjusted net earnings despite significant foreign exchange headwinds. While the first quarter is the least significant quarter of the year, the global Hasbro team delivered a strong start to the year.”
“Our first quarter results highlighted the strength of our brands, our global reach and our balance sheet,” said Hasbro CFO Deborah Thomas. “Foreign exchange did negatively impact both revenues and earnings in the quarter; however, several factors helped mitigate the negative impact to profitability. These included the continued momentum in our Franchise Brands, the benefit of favorable foreign exchange product cost hedges and a larger contribution of higher-margin Entertainment and Licensing revenues. Our first quarter results keep us on track to achieve our previously stated targets.”
Results by segment
US and Canada Segment net revenues increased 2.4 percent to US$ 345.7 million compared to US$ 337.7 million in 2014. The segment’s results reflect growth in the Boys, Games and Preschool categories, partially offset by a decline in the Girls category says the company. The US and Canada Segment reported 15.6 percent operating profit growth to US$ 41.4 million compared to US$ 35.8 million in 2014.
International Segment net revenues were almost flat at US$ 305.7 million compared to US$ 305.5 million in Q1-2014. Revenues in the Boys and Preschool categories increased but were offset by declines in the Games and Girls categories. On a regional basis, growth in Asia Pacific and Latin America was offset by a decline in Europe. The emerging markets increased revenues 3 percent in the quarter. Excluding an unfavourable US$ 61.0 million impact of foreign exchange, primarily in Europe, net revenues in the International Segment grew 20 percent and approximately 25 percent in the emerging markets. The International segment reported 2.1 percent decline in operating profit to US$ 1.9 million in Q1-205compared to US$ 2.4 million in Q1-2014.
Entertainment and Licensing Segment net revenues increased 73.6 percent to US$ 60.6 million in Q1-2015 compared to US$ 34.9 million in Q1-2014. Segment performance was driven by licensing revenues for Franchise Brands, in particular ‘My Little Pony’ and ‘Transformers’, during the 2014 holiday period and a multi-year digital streaming deal for Hasbro Studios television programming. The Entertainment and Licensing Segment reported 173.3 percent operating profit growth to US$ 16.4 million compared to US$ 6.0 million in 2014.
Results by Category
Boys category net revenue in Q1-2015 increased 10 percent to US$ 272.6 million. This growth was driven by year-over-year revenue gains in Franchise Brands ‘Transformers’ and ‘NERF’, as well as from growth in Marvel products and initial shipments of Jurassic World says the company.
Games category revenues increased 7 percent in the current quarter. Franchise Brands ‘Magic: The Gathering’ and ‘Monopoly’ increased revenues in the quarter and were partially offset by declines in several other brands, including Angry Birds games.
The Girls category revenues declined 16 percent in Q1-2015, primarily due to declines in ‘Furby’, ‘Furreal Friends’ and Easy Bake products. Growth in ‘Littlest Pet Shop’ and ‘Play-Doh Dohvinci’ products partially offset these declines.
Preschool category revenues increased 22 percent in Q1-2015. The ‘Play-Doh’ brand and ‘Playskool Heroes’ products, fuelled by growth in ‘Transformers Rescue Bots’ and initial shipments of ‘Jurassic World’, continued to be strong performers in the category and more than offset declines in core Playskool products informs Hasbro.