Lego expects to take market share in financial slowdown

Lego chief govt Niels Christiansen expects the world’s largest toymaker to develop its market share this 12 months whilst rising prices within the first half ended a streak of stellar revenue progress.

The Danish privately owned group reported a 17 per cent enhance in revenues within the first half to DKr27bn ($3.5bn) because it grew considerably quicker than a sluggish toy business however web earnings slipped 2 per cent DKr6.2bn.

“We’ve navigated fairly a number of uncertainties comparable to Russia, Covid-19 and China, and rising prices and we’ve been delivering above expectations,” Christiansen informed the Monetary Occasions.

Rising investments in digital merchandise, eliminating fossil fuels from its plastic bricks and the price of absorbing increased uncooked materials and vitality costs mixed to go away the group’s first-half working earnings flat at DKr7.9bn.

The group loved a unprecedented first half of 2021 when its earnings greater than doubled. The toymaker has cemented its standing because the business’s largest in each gross sales and particularly earnings after explosive progress previously 4 years as ever extra kids purchased its units centered on Star Wars and Harry Potter in addition to police and hearth stations.

Lego avoided elevating the prices of its units all through 2021 and the primary half however adjusted some costs in August, totally on merchandise focused at older shoppers moderately than kids, Christiansen added.

He mentioned that Lego anticipated its progress price to normalise, echoing what he mentioned in March after report progress in 2021, however that the group thought it might counter the worldwide financial slowdown.

“We’ve had three or 4 unbelievable years the place we’ve mainly doubled the corporate. I’m not deaf to some folks speaking a few tougher financial setting. However we additionally imagine that the issues underpinning us taking extra market share, are sustainable,” he added.

Lego, which continues to be owned by its founding household and an academic basis, is aiming to eradicate plastic baggage from its units by 2025 and can introduce using paper coverings within the coming months. It’s also wanting into making its bricks from recycled plastic bottles moderately than oil-based plastic.

It’s aiming to triple the variety of software program engineers it has by the top of 2023 because it explores extra digital merchandise comparable to a tie-up with Epic to provide Lego video games within the metaverse.

Smaller rivals Hasbro and Mattel elevated their first-half revenues by 2 per cent and 20 per cent to $2.5bn and $2.3bn respectively. They lag additional behind Lego by way of web revenue, with $203mn at Hasbro and $88mn at Mattel within the first half.

Lego has responded to turmoil within the retail market after the chapter of Toys R Us by stepping up the tempo of opening its personal shops. Within the first half, it opened 66 shops, taking its complete to 833. It goals to open one other 104 within the second half.