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The Globe and Mail

Mattel profit tops estimates on lower costs

In this file photo taken Feb. 12, 2010, an Astronaut Barbie, right, is shown at the Mattel exhibit, at the New York Toy Fair.

Mark Lennihan/AP

Mattel Inc. reported a higher-than-expected quarterly profit on Tuesday as the world's largest toymaker kept a tight lid on costs to offset weak global demand and a strong dollar.

The news comes as toy companies gear up for the all-important holiday selling season, when many of them make more than a third of their sales.

Mattel, home to brands such as Barbie, Hot Wheels and Fisher-Price, said its second-quarter net income had risen to $96.2-million (U.S.), or 28 cents a share, from $80.5-million, or 23 cents a share, a year earlier. Analysts on average were expecting a profit of 21 cents, according to Thomson Reuters I/B/E/S.

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Sales were flat at $1.16-billion, while analysts expected $1.13 -billion.

Mattel partly offset the effect of unfavorable currency exchange rates by spending fewer dollars on making and advertising its products.

A stronger dollar brings down the value of exported goods by U.S. companies.

The company has also found it hard to replicate the success of last year's "Cars 2" movie-themed toy line with its newer playthings tied to "Brave" and the latest Batman movie, analysts have said.

Worldwide gross sales for the entertainment business were down 36 percent, mainly on decreases in the "Cars 2" merchandise, while those for Barbie were up 5 percent.

Smaller rival Hasbro Inc is due to report its results next week.

Mattel sells toys through retailers such as Wal-Mart Stores Inc., Toys R Us Inc., and Target Corp. as well as through its own catalog and website.

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Also on Tuesday, Mattel's board set a third-quarter cash dividend of 31 cents a share, continuing to keep the annual payout at $1.24.

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