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DreamWorks Seen Posting 2014 Loss on ‘Dragon’ Sequel

“How to Train Your Dragon 2” is falling short of box-office forecasts and will drag DreamWorks Animation SKG Inc. to its second loss in three years, according to Cowen & Co.

The film, released on June 13, will probably generate $180 million in U.S. and Canadian ticket sales, Doug Creutz, a Cowen analyst, said in a report today. He previously projected $250 million.

“How to Train Your Dragon 2” won’t reach profitability in theaters, Creutz estimated. A sequel to the 2010 original, the film will eventually generate profit of $171.1 million for Chief Executive Officer Jeffrey Katzenberg’s studio, including DVD sales, movie rentals and TV rights. That means investors will have to wait until 2016 for significant profit from DreamWorks Animation, Creutz said.

“Given recent film performance and an upcoming film slate that has few obvious winners, DreamWorks Animation still appears to us to be a relatively unappealing stock,” wrote Creutz, who rates the company the equivalent of a hold.

In 2016, Glendale, California-based DreamWorks Animation will benefit from revenue from expanding television production and lower film costs, Creutz said. He projects a net loss of 7 cents a share for 2014, after previously forecasting a profit of 28 cents.

DreamWorks Animation fell 3.8 percent to $22.57 at the close in New York. The shares slid 11 percent on June 16, the first day of trading after the film’s debut weekend, and are down 36 percent this year.

International Sales

Allison Rawlings, a spokeswoman for DreamWorks Animation, declined to comment.

Creutz also reduced his international box-office estimate, to $495 million from $562 million.

“Meaningful profitability for the company remains elusive,” the analyst wrote. DreamWorks Animation reported profit of 65 cents a share in 2013 after a 43-cent loss in 2012.

Katzenberg said at the film’s May screening in Cannes that he wanted to extend the series to a fourth film while the director of the planned trilogy, Dean DeBlois, was not yet on board. A third film is scheduled for release in 2016.

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