LEGO upbeat despite losses

LEGO believes it has turned the corner despite net losses doubling to 1.9 billion Danish Kroner (£170m) after special items and the firm has finally decided to sell its theme park business.
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Total turnover fell to DKK7.9bn (£729.2m) from DKK8.4bn (£775.4m) in 2003, with Lego blaming intense price competition squeezing margins. The group said that it had also booked a writedown of DKK528m (£48.7m) after selling the Legoland parks. It also reported to be considering moving production from Denmark in a bid to cut costs.

Profits before special items and tax did improve to DKK103m (£9.5m) from a loss of DKK1.1bn (£101.5m) due to cost savings. But restructuring costs of half a billion and an impairment of DKK723m (£66.7m) on fixed assets resulted in the sharp rise in net loss, from DKK935m (£86.3m) in 2004.

CEO Jorgen Vig Knudstorp said: "It is a positive development that we managed to improve our result before special, non-recurring items by more than DKK1bn - and in global terms halted what had been a decline in our market. In 2004 we could tell the world: we're back in the game! During the year we cut our costs by more than DKK1.5bn, and we made substantial asset reductions. At the same time we increased our competitiveness by working closer with our customers and focusing more sharply on our core products. In view of prevailing market conditions, our fiscal result and stronger competitive position are a good step in the right direction. At the same time, we have laid the foundations for 2005 and our goal of restoring profitability in 2006."

This year the group expects unchanged revenues and a profit before special items and tax of around DKK200m crowns.



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