Acquisition helps boost toy maker’s sales 90%
MONTREAL— Toy maker Mega Bloks Inc. constructed a 45 per cent increase in third- quarter profit to $ 20.4 million ( U. S.) as sales increased 90 per cent. Net earnings in the July- September quarter totalled 62 cents a share, compared with $14.1 million ( U. S.), or 48 cents per share, a year earlier, the Montrealbased company said yesterday. Mega Bloks, which reports in U. S. dollars, said sales soared to $ 163.5 million from $ 85.9 million, augmented by the $355 million acquisition in late July of Rose Art Industries, a New Jersey-based arts and crafts maker.
Analysts surveyed by Thomson First Call had on average expected earnings of 60 cents a share on revenue of $ 148 million. Mega Bloks shares rose 7 per cent in early trading on the Toronto stock market after the quarterly report.
“ The past three months have enabled us to confirm that Rose Art is everything we had expected,” chief executive Marc Bertrand said during a conference call with analysts.
In addition to the Rose Art contribution, Mega Bloks showed strong organic growth, with sales for the toys division up 37 per cent to $ 117.4 million on strong demand for Mega Blocks and Magnetix construction toys, games and puzzles.
Sales for the stationery and activities division were $ 46.1 million, driven by Rose Art back- toschool sales.
“ In Canada, we recorded growth across all categories,” Bertrand said, adding that “ the international market remains one of our biggest opportunities for long- term growth” as Rose Art expands outside the United States with an expanded and unified Mega Bloks sales force.
“ We have a great Mega Bloks business that’s going to continue to grow internationally; we’ve now complemented that with Magnetix, which gives us another strength to grow that construction business, and this activities-stationery business will grow because we’re going to globalize it,” Bertrand said.
“ So you can chalk that all up that our international business will continue to outpace our Americas business.” The strong Canadian dollar had a minimal effect on the quarter, Mega Bloks said, and the company is also insulated from rising plastic prices as resin is expected to represent less than 10 per cent of its cost of goods sold in future.
“ Our products performed extremely well at retail and we continued to execute our international strategy,” Bertrand said. “ We are well positioned for the fourth quarter and excited by the opportunities for our expanded product portfolio going forward.” The company’s stock traded at $ 25.55 ( Canadian) shortly after the Toronto stock market opened, up $1.68. The stock closed up less than 1 per cent.