Production worries for Lego

Lego says manufacturing cuts may have created a product shortage in the run-up to Christmas.
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The firm says it is having a hard time keeping up with demand as toy stores prepare for the Christmas season.

"Many of our most popular products are sold out," said a spokeswoman. "As part of efforts to restructure the company and focus on our core business, we had to make some cuts and the company has not had time to readjust its production."

Simonsen declined to say how many orders had been turned down, but said the restructuring changes had affected the production of Duplo bricks and boxes with Lego City, Star Wars and Lego Technik sets.

The group has been trimming its staff at home and abroad since starting a restructuring program four years ago. Part of its production and distribution has been moved to countries with lower wages than Denmark, including the Czech Republic and Mexico.

Boersen, Denmark's leading financial newspaper, estimated that Lego could lose 750 million Kroner ($127m) because of lost Christmas sales.

The group posted a net profit of 505 million Kroner ($86m) in 2005, compared with a net loss of 1.93 billion Kroner in 2004, on strong sales led by its Bionicle line of snap-together creatures.

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