Nelvana scores success

Company sees a record 75% earnings increase

Multifaceted entertainment company Nelvana reported Tuesday a record increase of 75% in net earnings for the year, as well as a fourth-quarter jump of 34%.

Total revenues for the year ended Dec. 31, 1998, jumped to C$75.1 million ($49.2 million), a 34% increase from $36.8 million in 1997. Net earnings for the year were $5.6 million or 79¢ per share, up from $3.2 million or 56¢ a share the previous year, with a net margin of 12%, compared with 9% last year. For the fourth quarter, the company reported net earnings of $2.8 million or 39¢ per share, up from $2.1 million or 36¢ per share.

“The results are really spectacular, in line with analysts’ expectations,” said Adam Shine, a research analyst at CIBC Wood Gundy in Montreal.

“1998 was really a year of quite a few successful endeavors,” said the company’s co-CEO, Michael Hirsh. “It was our best year ever, a golden year.” The biggest push to help the Toronto-based animated TV and film company, according to Hirsh, was a strategic decision made 18 months ago to eliminate all third-party service work and to shift to an exclusively proprietary production slate that provided higher margins and enlarged Nelvana’s library.

Series spur success

Nelvana produced and delivered 14 series and completed production on the balance of three more that were started in 1997. Proprietary production deliveries increased by 61% to 187 half-hour episodes from 116 in 1997, and library sales increased 35% to $14.4 million, up from $10.7 million in the prior year.

“We had a terrific number of rating successes in ’98,” said Hirsh, “rating winners like ‘Bob and Margaret,’ ‘Rolie Polie Olie,’ ‘Franklin’ and ‘Little Bear.’ ”

The company also made several major sales, including six series for CBS Television, and saw the addition of $2.8 million in revenue from publishing opera-tions since the acquisition of Kids Can Press in August.

“1999 is shaping up to be a record production year,” said co-CEO Patrick Loubert in a prepared statement. “We have 10 confirmed series renewals and seven new shows which are already in production.”

Shine, who has given the stock a “strong buy,” agreed. “I think as the Nelvana story unfolds in terms of its heightened growth profile, its track record and its inherent appeal, I think you’ve got a pretty solid story going forward.”