Shares of toymaker Mega Brands Inc. lost one-third of their value Friday after the company lost money in the third quarter and said it will shift more work to China.

The Montreal-based company said it lost $11 million US, or 31 cents share, in the quarter. Analysts had been expecting a profit of 77 cents a share, according to Thomson Financial. It made a profit of $18 million US, or 56 cents a share, in the same period last year.
 
The company's sales in the third quarter fell 8.8 per cent to $184.1 million compared with $201.8 million last year. Mega Brands said the drop in sales was primarily due to production delays in Asia that resulted in at least $15 million of orders not shipped, as well as lower shipments of Magnetix products.

Mega Brands 3-month stock chart

Roughly seven million Magnetix buildings sets were the subject of a recall earlier this year after a number of young children swallowed loose parts from the toys.

In the wake of the earnings report, Mega Brands shares fell $5.10, closing at $9.95.

"Our third-quarter results are not what you — or we — expected them to be," Marc Bertrand, the company's president and chief executive, said during a conference call.

"These results are a reflection of the overall industry being
soft, the impact on consumer confidence of the repeated recalls by toy manufacturers."

Faced with the weak results, the company said it will shut down a manufacturing plant in Woodridge, N.J., next month, consolidate distribution in Seattle and shift more operations to China.

The company did not detail how the moves would affect its workforce.