Thursday July 22, 12:56 pm Eastern Time
Mattel posts higher profits before charges
LOS ANGELES, July 22 (Reuters) - Mattel Inc.(NYSE:MAT - news), the world's largest toymaker, on Thursday reported an 81 percent surge in operating earnings, although it posted a net loss due to previously announced charges related to restructuring and other costs.
Mattel, maker of Barbie dolls and Hot Wheels cars, matched Wall Street forecasts by posting quarterly operating earnings of 15 cents a share, or $62.5 million, vs. 8 cents, or $34.6 million, in the same period last year.
The higher pre-charge profits reflected strong gross margins and a reduction in selling, general and administrative expenses as a percent of sales, the company said.
However, including the $345 million in restructuring charges, the company recorded a loss of $204.3 million, or 50 cents a share, compared with a gain of $4.6 million, or 1 cent a share, in last year's quarter.
Sales in the quarter edged up 1 percent to $1.04 billion from $1.03 billion in year-ago.
''Our volume growth was less than we originally projected, due in large part to a very difficult European environment,'' Chairman and Chief Executive Jill Barad said. ''As a result, we saw sales decline 9 percent in our markets outside of the United States.''
Domestic sales rose 5 percent, driven by increases in Fisher-Price, and The Learning Company, among others, and offset by declining sales in Barbie and Wheels.
Looking ahead, Barad said, ''we remain firmly committed to delivering $1.50 in earnings per share for the year, before charges.'' Wall Street analysts also expect Mattel to post profits of $1.50, according to First Call Corp.
Barad added that in anticipation of a strong second half, Mattel resumed its share repurchase program and it plans to buyback a total of 4 million shares this year.
The company said it expects to save $50 million in fiscal 1999 and at least $400 million over the following three years through its restructuring.
Mattel shares fell 19 cents to $23.69 on the NYSE.
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