High inflation and tight wallets are also having an impact on the toy industry. Despite this, the Danes are increasing sales slightly – and are gaining market share over the competition.
After several years of immensely increased sales and strong profits, Lego is able to position itself more strongly for the future. The strong financial position allows the Lego Group to make long-term investments, especially in digital, sustainability and manufacturing, said the building block giant from Billund in Denmark when presenting its half-year figures.
Demand continues to rise
The demand for Lego products has again exceeded that of the industry in the first six months of the year, Lego’s market share has grown significantly, said Lego boss Niels B. Christiansen.
This is also reflected in the figures: the bottom line is that the toy company posted a net profit of 5.1 billion crowns in the first half of the year. That’s the equivalent of more than 680 million euros. In the respective periods of the two previous years, this value was even higher, over 6 billion crowns.
Sales almost doubled in four years
Lego was able to continue to increase sales, albeit by far not as much as in the two prior-year periods, when it grew by 17 and 46 percent respectively: this time it rose slightly by around 1 percent to 27.4 billion crowns (3.7 billion euros ). According to the figures, it has almost doubled within four years.
The people in Billund are very satisfied with these results – especially at a time when high inflation and increased interest rates were putting pressure on the wallets of many consumers and thus also led to declining sales figures in the toy industry. It was a challenging six months for the industry, but Lego managed to continue to gain market share, Christiansen told the German Press Agency. “This shows us that all our investments are paying off.”
New production facilities
For some time now, Lego has been investing a lot of money in what should bring growth to the group in the years to come. These are mainly three areas: sustainability, digital and production. Among other things, the cornerstone for a new factory in the US state of Virginia was laid in April and construction of another new factory in Vietnam continued. Both production facilities cost the company one billion dollars each and should be CO2-neutral when they are completed in the next two years.
By 2032, the Lego Group’s CO2 emissions are to fall by 37 percent compared to 2019. 2032 is a special year for Lego: that’s when the group will be 100 years old. Christiansen is sure that children will then continue to play with plastic Lego bricks – but no longer plastic based on fossil fuels, but based on biological, recycled and reused materials.
Germany remains a very important market, emphasized Christiansen. “Things are going really well in Germany. We have a large market share, which has continued to grow in recent years,” said the Lego boss. There is probably no other country where the entire range of products is so popular.
A total of 988 branches
According to the company, global bestsellers included product series such as Lego Icons, Lego Star Wars, Lego Technic and Lego City. On the one hand, Lego is strengthening online trade, but on the other hand it is continuing to focus on branches where customers can pick up products: 89 new Lego branches were opened worldwide in the first half of the year, bringing the total number to 988.
“It’s a bit against the trend,” said Christiansen. “But we want people to be able to see the brand and play with the bricks.” Lego remains a “physical brand”. In Germany in particular, parents are aware of how much time children spend digitally. Therefore, they would understand the importance of children being able to play with physical toys.