Lego bucks financial trend - ToyNews

Lego bucks financial trend

The Lego Group today announced a successful 2008 with considerable increases in both sales and profit.
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The firm's UK arm reported a sales growth of 51 per cent, helping to grow the total UK construction toy market by 13 per cent.

Lego UK also increased its market share from 2.2 per cent in 2007 to 3.3 per cent in 2008 – making it the largest it has ever been and of the top five UK toy manufacturers, only Lego UK saw growth in December 2008, compared to December 2007.

Marko Ilincic, MD of LEGO UK, commented: “Last year was particularly significant for Lego UK because it marked the 50th anniversary of the Lego brick. Our goal since its launch over fifty-years ago has remained the same - that Lego products should encourage learning and development through play.

"This has stood us in good stead and, despite the economic climate, we are pleased to be able to announce that sales for 2008 have remained very healthy.”

Globally, net profit for 2008 increased to £144 million compared to £101 million in 2007.

Revenue amounted to £1,015 million against £789 million in 2007, an increase of 28.6 per cent. Adjusted for exchange rate movements in 2008, the increase would have been 18.7 per cent.

Nearly all markets reached two-digit growth rates over the year. English-speaking markets saw particularly high sales increases and in Central Europe, the firm increased its market leadership through continued growth.

Overall, classic play themes such as Lego City are still among the largest product lines. The Star Wars range also achieved extensive growth in 2008, and the launch of Lego Indiana Jones was very successful.

The global market for traditional toys saw a slight decrease in 2008. A moderate decrease was seen on the American toy market and Japan saw extensive decreases. On other Asian markets and on the Eastern European markets, toy sales were increasing, whereas markets stagnated in Western Europe in 2008. Despite this, the Lego Group has increased its market share in all its markets.

The firm expects the toy market to be increasingly affected in 2009 by the worldwide recession. Nevertheless, Lego expects moderate sales increases in 2009. In order to support this growth, the company is planning to continue its investments in the development of markets and products as well as production capacity.

Jørgen Vig Knudstorp, President and CEO said: ”Our results for 2008 have been extraordinarily good. And this applies not only to the financial results. During 2008 we also took over two factories in the Czech Republic and Hungary, and we began the construction of a factory in Mexico. The successful change to increased own production, combined with strong sales increases, is attributable to the impressive performance by all our employees.

”Despite gloomy economic prospects, we feel well prepared for growth in 2009 as well, and our optimism is supported by the results seen in the first months of the year.”

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