Lego ahead at half-time

Lego’s half-time results better than expected, with the UK up 10 per cent.
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Sales were expected to fall in 2007 but, the Group sold five per cent more during the first half of the year than it did in the same period of 2006, while Lego UK sales were up 10 per cent.

Group profit before tax for the first half year was DKK 173m (£15.7m) compared with DKK 168m (£15.2m) for the same period the previous year. The result is better than expected at the beginning of the year.

Sales during the first six months of this year were DKK 2,966m (£269.7m) compared with DKK 2,821m (£256.6m) in the corresponding months of 2006. The increase was due in particular to higher sales of such classic lines as Lego City and Lego Technic and Lego Star Wars. The firm says its new Aqua Raiders product line also did well.

The prospect at the beginning of the year was of a substantial decline in profits on account of heavy investment in the Group’s business platform, including IT, production and innovation.

The result of DKK 173m (£15.7m) is better than had been forecast. The firm says the improvement can be attributed primarily to a combination of higher sales and a postponement of “certain cost items”.

At the end of the first half year the Group’s equity was DKK 765m (£69.5m) compared with DKK 274m (£24.9m) at the end of the corresponding period in 2006. Cash flows from operations are, at DKK 208m (£18.9m) unchanged in relation to the same period of 2006.

Outsourcing of production continues. But in view of the need for increased capacity to meet higher demand, it has now been decided that further relocation of moulding activities scheduled to commence in late 2007 will be postponed 12 15 months.

The Group is raising its forecast of the result for the full year to DKK 900m (£81.8m) compared with DKK 550m (£50m) at the beginning of the year.

Total sales for the year are now expected to equal the 2006 level of around DKK 7.8 billion (£709m).

CEO Jørgen Vig Knudstorp (pictured), commented: “The result demonstrates that our core products and values are the right ones, and at the same time we have enjoyed the benefit of a positive note on most of our markets. This is extremely useful in a situation in which we continue to invest many resources in preparing the Group for the future.

“We are only halfway through the implementation of our seven year strategy plan, and although we have come a long way in many areas there is still a lot to do. During the present phase the focus is on creating a long term, sustainable business platform – and we haven’t achieved that yet. We still need to focus on improving the efficiency of our operations and reducing our fixed costs so that we can derive full benefit from investment in our improved business platform.”



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