Lego CEO forecasts 50 per cent profit growth in 2009

Katie Roberts

By Katie Roberts

October 29th 2009 at 11:46AM
Lego CEO forecasts 50 per cent profit growth in 2009

Jorgen Vig Knudstorp has said he hopes to post a 50 per cent global profit growth this year.

Lego's CEO told CNBC: "I think we can continue this low double-digit growth for the foreseeable future." 

Five years ago, when Knudstorp fist joined the firm, it was losing around $350 million a year. Knudstorp has since restructured the company, closed down plants and minimised packaging.

While many firms are outsourcing production to more cost-effective countries like China, Lego decided to take its operations back to the US.

Knudstorp explained: "The real economic profits are much less (when you outcome) because you lose sales, you have too much inventory, you've got too much working capital.

"So we found that for a number of reasons (it's) economically unattractive to manufacture in China to serve our major markets. China to us today is 40 times smaller than the US market. I think it's going to be another 15 to 20 years before China is a major market in the context of Lego."

The CEO also said he may be manufacturing in Asia in ten years, but in the near future, it plans to increase capacity in Mexico.