Lego builds solid base as profits and sales return to growth
Danish toy firm Lego said it was bucking industry trends as it reported an improvement in both sales and profits, fuelled by the popularity of series such as Star Wars, Harry Potter and Ninjago.
Traditional toy makers have struggled to counter the surging popularity of digital games, and in 2017 Lego saw both revenue and net profit decline. But the maker of plastic bricks said on Wednesday that 2018 revenues had grown 4% to 36.4bn Danish kroner, or 7% at constant currency rates, while global consumer sales rose 3%.
Operating profits increased 4% to DK10.8bn, which the privately-owed group attributed to “increased sales, balanced with a continued focus on investing for the future”.
Chief executive Niels Christiansen, who joined Lego 18 months ago, said: “We set out with one aim in 2018, to stabilise the business. We are pleased to have achieved this, and to have delivered modest top and bottom-line growth.
“We are especially encouraged by our progress given the challenges facing the toy industry and the departure of specialist retailers such as Toys R Us. These shifts gave us the opportunity to strengthen our partnerships with retailers and find new ways to connect with shoppers across digital and physical channels.”
Lego added that established markets in the US and Western Europe had seen low-digital revenue growth, while in China – “a strategic growth market for the group” – revenues grew by “strong double digits”. The top-selling themes included Star Wars, Harry Potter, Ninjago, Friends, City and Classic, among others.
Cash flow from operating activities was DK9.8bn, down 8% down because of “changes in working capital in line with business momentum”.