UPDATE 2-DreamWorks sees strong quarter as "Turbo" picks up speed

Wed Jul 31, 2013 6:39pm EDT

* Animated snail tale defies writedown expectations

* "The Croods" helps second-quarter profit almost to double

* Appoints ex-Nickelodeon exec to run growing TV business

* Shares up 6 pct after the bell

By Chandni Doulatramani

July 31 (Reuters) - DreamWorks Animation SKG Inc said worldwide box-office takings would propel its latest animated movie, "Turbo", to a profit that few analysts had expected, sending its shares up 6 percent after the bell.

Despite a slow start at U.S. theaters, which had prompted several analysts to forecast a writedown on the film, "Turbo" had performed well worldwide and was expected to be profitable, DreamWorks Chief Executive Jeffrey Katzenberg said on Wednesday.

The studio reported a near-doubling in second-quarter profit due to the global success of its animated hit "The Croods", which tracks a prehistoric family's road trip and features the voices of Nicolas Cage and Ryan Reynolds.

Reynolds, along with Samuel L. Jackson, can also be heard in "Turbo", the story of a garden snail with dreams of speed. Its U.S. launch in July put the movie up against rival studios' films such as "Monsters University" and "Despicable Me 2".

Speaking on a post-earnings conference call, Katzenberg said the film's soft opening was a result of an overly saturated marketplace and a difficult release date. It has also gone up against "Epic" and "The Smurfs 2" at the box office.

"Internationally, where we have not faced the same release-date challenge as we did domestically, Turbo's off to an excellent start," he said.

DreamWorks spent about $135 million to make "Turbo". The movie has so far grossed about $100 million in receipts, according to Box Office Mojo, a website that tracks theater ticket sales.

The fact that DreamWorks did not mention a widely anticipated writedown in relation to "Turbo" could mean the film is set to make a profit based on its international performance, said Lazard Capital Markets analyst Barton Crockett.

DreamWorks itself said it expected "Turbo" to perform better than "Rise of the Guardians", the poor showing of which resulted in DreamWorks taking a $165 million writedown in the first quarter - its first loss-making quarter in almost six years.

But it won't be as popular as "The Croods", the studio said.

EXPANDING IN TELEVISION

The prehistoric family's tale has raked in nearly $584 million since its release on March 22. Katzenberg said this made it the fifth-highest grossing move of the year. More than two-thirds of box-office takings are from outside the United States.

In the current quarter, DreamWorks expects its results to be driven by television revenue for "Rise of the Guardians" and "Kung Fu Panda 2".

Television is a growing source of revenue for DreamWorks. In June, Katzenberg said TV revenue would reach $100 million this year and rise to a "steady state" of $200 million annually from 2015.

The studio said on Wednesday it hired a former Nickelodeon executive, Marjorie Cohn, to head its television unit. She will oversee production and development for DreamWorks Animation's television business.

In the second quarter, DreamWorks' net income surged 73 percent to $22.2 million, or 26 cents per share, from $12.8 million, or 15 cents per share, a year earlier.

Revenue rose 31 percent to $213.4 million. "The Croods" contributed about a third of the total.

DreamWorks' shares, which have risen about 26 percent in the last three months, traded at $26.16 after the bell, having closed on the Nasdaq on Wednesday at $24.76.