Resurgent Lego continues return to form

Lego has continued its comeback, announcing full year results showing sales and profits both improved and its core products continuing to perform.
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Net profit for the year totalled £129.2m (DKK 1,430m) against £46.2m (DKK 505m) in 2005. In 2005, profit for the year before tax including discontinuing activities was £63.4m (DKK 702m).

Turnover was up 11 per cent to £706.6m (DKK 7,823m) against £636.8m (DKK 7,050m) in 2005.

Following the financial reconstruction of the company in 2004 and 2005, and a core business strategy for 2006 the firm says this year and the year after will see a focus on improving profitability and service levels to its customers.

The results for 2006 are viewed as the second phase of the strategy to put the firm back on track.

“Our business strategy has clearly paid off during 2006 and we enjoyed our best trading year in the UK since 2002 with Lego City, Star Wars, Bionicle and Exo-Force being the UK’s strongest performers,” said Marko Illinic, managing director of Lego UK.

“We have placed profitable growth between ourselves and our customers as a priority over market share whilst we build a strong and sustainable business platform. 2006 saw consumer sales, stock turn and margin growth for nearly all major UK customers with sales up nearly five per cent year on year”

Commenting on the global performance, CEO Jorgen Vig Knudstorp (pictured), said: “I consider the results very satisfactory. It clearly shows that there is plenty of life and relevance in Lego products and that our strategy of focusing on the core of our brand is the right approach. We are, however, very much aware that, despite the good results, we do not meet all our objectives in relation to being a sustainable business.

“Despite the announcement in 2006 of the outsourcing of most of the production, the employees delivered a great and impressive effort, even though the pressure on the employees has without doubt been very heavy.

”Furthermore, due to the unexpectedly great demand, we have not been able to meet the retailers’ needs in a completely satisfactory way. In the coming years, we will increase our focus on meeting our objectives in relation to all our stakeholders”.

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