NEW YORK (Reuters) - Hasbro Inc (HAS.N) posted a better-than-expected quarterly profit on Monday, boosted by strong demand for its Transformers, Nerf and Furreal Friends product lines, helping to send its shares up as much as 4 percent.
The second-largest U.S. toy maker also said Chief Executive Al Verrecchia would step down as CEO and become chairman. Brian Goldner, its chief operating officer, will become CEO as of May 22.
The company said Verrecchia will move to his role as nonexecutive chairman at the end of the year, replacing Alan Hassenfeld, grandson of Hasbro founder Henry Hassenfeld.
Fourth-quarter earnings rose to $133.7 million, or 84 cents a share, from $108.3 million, or 62 cents a share, a year earlier. Quarterly sales rose 16 percent to $1.3 billion.
Analysts, on average, were expecting profit of 81 cents a share on sales of about $1.22 billion, according to Reuters Estimates.
Hasbro's shares were up 38 cents, or about 1.5 percent, at $26.25 in afternoon trading on the New York Stock Exchange, after rising as much as 4.2 percent earlier in the session.
"On a global basis, our boys, girls, preschool, and games and puzzles categories all performed well," Verrecchia told a conference call.
The results come two weeks after industry leader Mattel Inc (MAT.N) posted a better-than-expected fourth-quarter profit despite a 3 percent decline in gross U.S. sales and publicity surrounding the recall of millions of its toys due to safety and lead paint concerns.
"Hasbro is clearly showing that they have been firing on all cylinders," said Thomas Russo, who helps manage more than $3 billion at Gardner Russo & Gardner.
"They've had success driving revenues while at the same time controlling costs," said Russo, whose firm owns about 3 million Hasbro shares.
Sales in the quarter rose 8 percent at Hasbro's North American division, although operating profit fell 22 percent partly due to higher royalties and advertising expenses. Operating profit was also affected by Hasbro's investment in its Wizards of the Coast online gaming initiative.
Hasbro's international segment sales, meanwhile, climbed 29 percent as operating profit rose 40 percent.
The fourth quarter is the most important time of year for toy companies because it includes the holiday shopping season, when the industry rings up nearly half its annual sales, according to market research firm NPD Group.
RISING COSTS
Looking ahead, Hasbro said costs will climb this year due to the rising price of labor and commodities, the appreciation of the Chinese currency, and product testing.
Many of Hasbro's toys are manufactured in China.
"So clearly there will be some price increases this year," Verrecchia said. "We'll continue to look to improve our efficiencies in the supply chain."
In an interview on CNBC, Verrecchia said the Asia-Pacific and South American markets each have great potential, as brands that have performed well in the United States are doing well with children overseas.
"The opportunity to market our product ... is clearly growing very rapidly," Verrecchia said.
Meanwhile, the company will look to the Transformers animated television series to help one of its key product lines maintain momentum this year until the movie sequel in 2009.
Last year, toys based on the Transformers film helped drive its boys division.
Later this year, the company will roll out toys tied to the films "Iron Man," "The Incredible Hulk" and "Indiana Jones and the Kingdom of the Crystal Skull."
Hasbro's stock was trading on Monday afternoon at 12.7 times 2008 earnings, a premium to rival Mattel, which was trading at a multiple of 12.5 times 2008 earnings.
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