Lego reports sales rise, but investments dent profits
The group is ‘satisfied’ with the toy giant’s performance given the ‘transformative shifts’ in the global toy industry.
Toy maker Lego said its revenue was up 4% in the first half of 2019 but significant investments to create long-term growth led to a 12% drop in net profit.
The privately-held Danish company reported first-half revenue of 14.8 billion kroner (£1.81 billion), while net profit dropped to 2.7 billion kroner (£330 million).
Lego CEO Niels B Christiansen said the group was “satisfied with our performance given the transformative shifts which continue to reshape the global toy industry”.
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Mr Christiansen said that the investments were meant to grow, open new markets in China and India and develop online sales platforms, among other things.
The group, which is based in Billund, Denmark, does not release quarterly figures.
Consumer sales in established markets such as the Americas and Western Europe grew by single-digit percentages. China, which Lego called “a strategic growth market,” continued its strong double-digit growth in consumer sales.
Lego has some 500 stores around the world carrying the toy maker’s logo. The group will continue to invest in China and is on track to have more than 140 shops in 35 cities by the end of the year.
In addition, more than 70 stores carrying the Lego brand will open outside of China during 2019.
There also are plans to open an office in Mumbai, India, in early 2020, from where the group will seek to expand its presence in that country.
“The growing middle class, the importance of education and growing economy make India a logical next step in our efforts,” Mr Christiansen said, adding that stores are really important as they allow children to actually touch the product and learn about it.