Mega rebounds in Q3 aided by Rose Art settlement
By Staff -- Playthings, 11/13/2009 9:18:00 AM
MONTREAL—Mega Brands recorded a $72 (US) million profit in the third quarter, a figure helped significantly by the company’s settlement of litigation against Rose Art’s former owners.
The Q3 profit compared to a net loss of $122.1 million or $3.34 diluted loss per share in the third quarter of 2008, a period that was negatively impacted by $150 million in pre-tax charges.
Minus the company’s Rose Art related recovery of purchase price and litigation expenses, net earnings in the third quarter of 2009 were $6.9 million, or 14 cents per diluted share.
"We are pleased with the third quarter results. Our return to profitability reflects mainly the significant cost reductions and supply chain initiatives implemented over the past 18 months under our Value Enhancement Plan," said Marc Bertrand, Mega Brands’ President and CEO. "Sales trends in the fourth quarter are positive and we are on track to end the year on a strong note in terms of top line, inventories, and profitability. We are well advanced on key product launches for 2010, with Thomas the Tank first out of the gate, Iron Man in the spring and several exciting Mega innovations in the second half of the year."
Net sales in the third quarter fell to $118 million compared to $160.9 million in the third quarter of 2008. The decrease was “in line with the Corporation's expectations,” the company said, and reflects lower sales in both of its product segments—Toys, and Stationery and Activities.
Net sales of Toys product lines declined to $86.2 million compared to $107.9 million in the third quarter of 2008, a drop attributed mainly to lower shipments in the Boys 5-plus and magnetic construction categories.
Net sales of Stationery and Activities product lines declined to $31.7 million compared to $53.0 million in the third quarter of 2008.
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