Currency fluctuations slow Lego growth

Changes in currency value have slowed Lego's sales growth according to its CEO.
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Lego said sales growth will slow next year as the Danish krone's advance clips gains in the US and Asia.

Revenue will rise four per cent to five per cent next year, compared with the 12 per cent growth anticipated for 2008, Chief Executive Officer Joergen Vig Knudstorp said.

The krone's appreciation against sterling the dollar and the yen has lopped three to four percentage points off revenue growth so far this year, he said.

"This year is unusual,'" Knudstorp said. "It's not a natural growth rate. A steady five per cent is a natural rate. If I can sustain that over a 10-year period, I would be very happy."

The firm raised its forecast for 2008 sales growth last month after first-half profit more than doubled, helped by US demand for Indiana Jones-themed sets of its plastic building bricks.

Lego generated 30 per cent of sales in North America, Australia, New Zealand and the UK in 2007, and about 27 per cent in Scandinavia, the Benelux countries, eastern Europe and Asia.

Sales generated in local currency lose in value when translated back into Lego's main currency, the Danish krone. Lego has forecast sales of 9 billion kroner ($1.8 billion) this year.

"We're quite optimistic about this year,'' he said. "We are aware that macroeconomics are not moving in the right direction, but we have the right product portfolio."

Knudstorp forecast growth of at least 50 percent over the next seven years in China and said the toymaker wants to scale up in Mexico, Latin America and India. The company aims to increase its US market share by one percentage point to four per cent over the next five to seven years, he said.

Source: Bloomberg

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