Feb. 9 (Bloomberg) -- Hasbro Inc., the world’s second- largest toymaker, rose the most in two months in New York trading after saying income would grow in 2009 unless economic conditions or the value of foreign currencies significantly deteriorate.

Hasbro will keep costs down and continue to invest in the business this year, Chief Executive Officer Brian Goldner said in today’s release. The Pawtucket, Rhode Island-based company plans price increases in the “mid-single digits” on a percentage basis this year to counter higher costs, executives said today on a conference call.

While Hasbro’s gross margin may contract for another quarter, leaner inventories and easier year-over-year comparisons may help earnings in the second half of the year, Chris White, an analyst at Wedbush Morgan Securities in Los Angeles, said in a telephone interview. Hasbro’s quarterly revenue dropped for the first time in 2 1/2 years as the stronger dollar ate into overseas income, and lower home values and the worst jobless rate in 16 years prompted U.S. consumers to spend less.

Customers are “still spending on Hasbro’s products, just to a lesser extent than before,” White said. “Clearly Hasbro is doing something right.”

Excluding a negative impact of $80.1 million from foreign- exchange translations, Hasbro’s revenue rose 1 percent, helped by sales of toys based on the Transformers and Star Wars movies, as well as Playskool, Nerf and G.I. Joe products.

Hasbro rose $1.53, or 6.5 percent, to $25.07, at 4:15 p.m. in New York Stock Exchange composite trading, the largest intraday gain since Nov. 24. Before today, Hasbro and Mattel Inc. both dropped 19 percent this year.

Analysts’ Estimates

Fourth-quarter net income dropped 30 percent to $93.6 million, or 62 cents a share, from $133.7 million, or 84 cents, a year earlier, Hasbro said today. Analysts estimated profit, excluding some items, of 76 cents a share, the average of 12 projections compiled by Bloomberg. Revenue decreased 5 percent to $1.23 billion from $1.3 billion.

Capital spending will be $90 million to $100 million in 2009, Chief Financial Officer David Hargreaves said on a conference call today with investors and analysts.

The fourth quarter accounted for 31 percent of the company’s annual sales. The maker of Monopoly and the Littlest Pet Shop toys last reported a decline in sales in the second quarter of 2006. The International Council of Shopping Centers said holiday sales fell 2.2 percent, the most since it started tracking the data 40 years ago.

Hasbro worked with retailers to offer promotions during the holiday season. While that put the company in a “much better inventory position than we would have otherwise,” it also hurt operating profit, the company said in the statement.

Mattel, the world’s biggest toymaker, reported on Feb. 2 fourth-quarter profit that missed analysts’ estimates after the rising dollar blunted sales of Barbie dolls and Hot Wheels cars.

To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net.

Last Updated: February 9, 2009 16:26 EST