Mattel Inc. (MAT), the largest U.S. toymaker, Monday posted a disappointing quarterly profit on soaring costs of raw materials, while rival Hasbro Inc.'s (HAS) earnings jumped 57 percent, beating expectations, on strong demand for Star Wars merchandise.

Toymakers have been suffering as oil prices topped $60 per barrel, making plastic more expensive. Mattel raised prices on its toys this year.

But profit margins have been under pressure amid competition from companies such as LeapFrog Enterprises Inc (search) and Jakks Pacific Inc. (search) and as some retailers hesitate to pass along the higher prices.

"There is no question that the cost of manufacturing and distributing toys is going up," Mattel Chief Financial Officer Kevin Farr said on a conference call with analysts.

Mattel shares were down 2.4 percent at $18.98, while Hasbro was up 2.3 percent at $21.97.

Mattel, the El Segundo, Calif.-based maker of Barbie dolls and Rescue Heroes figures, said earnings fell to $18.9 million, or 5 cents per share, from $23.5 million, or 6 cents per share, a year earlier.

Analysts on average were expecting 7 cents a share, according to Reuters Estimates.

Including a tax expense for the return of foreign earnings to the United States, the company posted a net loss of $94 million, or 23 cents per share.

Sales rose 10 percent to $886.8 million, despite a 4 percent drop in Barbie sales. Analysts polled by Reuters Estimates forecast $883.8 million.

U.S. Barbie sales were down 6 percent, on top of a 15 percent drop a year earlier, though better than the 25 percent decline the fashion doll posted in the first quarter.

"Barbie wasn't as bad as last quarter and total revenues were robust, so many may view this report positively," said Banc of America Securities analyst Gary Cooper. Demand for Mattel's Batman toys was particularly strong following the release of the movie "Batman Begins."

But Cooper said he expects operating margins to keep falling in the second half of the year, and Batman sales won't be as strong in coming quarters.

Mattel will also have a tough time showing big improvement over last year's solid fourth-quarter results, and foreign currency benefits probably won't be as significant.

"We continue to believe that 2006 Street consensus is too high and will be reduced due to margin pressures and sluggish sales," Cooper said in a note to clients.

Pawtucket, Rhode Island-based Hasbro, the No. 2 U.S. toy company and maker of the Easy-Bake oven and Tonka trucks, said second-quarter profit rose to $29.5 million, or 13 cents a share, from $18.8 million, or 6 cents per share, a year earlier.

Net revenue rose 11 percent to $572.4 million.

Analysts on average had expected a profit of 8 cents a share on revenue of $559.79 million, according to Reuters Estimates.

Revenue in Hasbro's U.S. toy segment rose 25 percent to $209.3 million, with strength in Nerf, My Little Pony, Transformers, and Star Wars.

"The general retail environment seems to have improved during the past couple of months," Chief Executive Al Verrecchia said on a conference call. "The question is, will it continue and for how long?"

Kay Bee Toys is expected to emerge from Chapter 11 next month, he said, and potential Toys R Us store closings will be more of an issue in 2006, not 2005.

Games segment revenue slipped to $142.9 million from $161.6 million on weak trading card sales and lower retail stocking of board games outside of the holiday season.

Hasbro executives said retailers, which have been striving to keep inventories tight, were waiting as long as possible before taking product on for the holidays.

International revenue rose to $210.2 million from $179.2 million.