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Lego defies inflation and rising costs

2022-09-28T11:36:35.975Z

Lego will be 90 years old in 2022 - and company boss Niels B. Christiansen can obviously rely on the brand's attraction: The toy company reports double-digit sales growth and announces new stores.



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Oktoberfest scene made of Lego bricks: 7.9 billion crowns profit in six months

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Sven Hoppe / dpa

When Ole Kirk Kristiansen founded Lego in 1932, he must have had no idea what a toy empire he would create.

90 years later, the Danish family business based in Billund continues to expand - and reports a good half-year result despite higher costs and inflation.

Specifically, sales in the first half of this year rose by 17 percent compared to the same period last year, which was already extraordinarily strong with an increase of 46 percent.

Currency fluctuations accounted for only a small part of the growth, which drove sales to 27 billion kroner (about 3.6 billion euros).

"Overall we are very satisfied," said company boss Niels B. Christiansen at a conference call on the results.

Despite unrest and fluctuations worldwide, the company has met its own expectations.

"We're growing faster than the market," he said, referring to the competition.

Christiansen also referred to the partnership with the software company Epic Games, which is intended to digitize its range of products, which has so far been quite analogue.

833 Lego stores worldwide

The interim weakness, when sales and profits fell at the beginning of Christiansen's term in 2018, seems to be over.

Instead of job cuts, it is now a question of bringing forward part of the salary increase in order to help employees through the energy crisis with high consumer prices.

Profit remained stable in the first half of the year at 7.9 billion crowns (about 1.1 billion euros) after 8.0 billion crowns in the same period last year.

In the longer term, however, according to a statement, Lego expects growth to "normalize".

Christiansen attributes the good development to the strength of the Lego brand, among other things.

Most recently, there were 770 different Lego products on the market, including the Lego Technic, Lego Star Wars and Lego Harry Potter series, which were particularly popular with consumers.

The toy manufacturer is also expanding strongly in its branches: 66 stores opened in the first half of 2022 alone, and around a hundred more are to follow by the end of the year.

Lego currently has 833 stores worldwide, including 349 in China.

Sales increased particularly strongly in Asia, but also in America and Western Europe.

The company currently produces in five factories in three countries.

Two more plants are to be built in the USA and Vietnam - with solar systems on the factory premises and thus CO2-neutral.

They want to produce locally for the individual markets and also help the environment, said Christiansen.

He also announced new packaging for the building blocks, which are still made of plastic.

The sets are to be delivered in paper bags instead of plastic bags from the second half of the year.

The stones themselves are to be increasingly made from recycled material.

Apr

Source: spiegel

All business articles on 2022-09-28

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