For years, Lego’s turnover knew only one direction: upwards. For the first time, the new Lego CEO Niels Christiansen presented the figures of the Danish company. And had to announce severe losses for 2017. Sales fell by around eight percent to EUR 4.7 billion.

The other key figures are no better: Last year, operating profit fell by 16 percent to 1.4 billion euros, while at the same time net profit shrank to just over one billion euros. CEO Christiansen commented on the background: “In 2017, revenues in our established markets declined, primarily due to inventory adjustment measures. This decline hurt our operating profits. In addition, we have simplified and reduced the organization to meet current business requirements. These difficult measures have now been completed. Our balance sheet, cash flow and profitability remain sound.” The streamlining of the company affected around 1,400 jobs – eight percent of the Lego workforce.

Business in China, the Middle East and Africa to be further expanded

The Group has set itself a number of targets for 2018 in order to increase sales again. This includes looking into promising markets. Lego sees great potential in China, where sales in 2017 were in the high double-digit range. The Lego Group has recently signed a partnership agreement with Tencent, the country’s largest Internet company, to further expand its presence in this strategic market. In addition, an office will be opened in Dubai at the end of 2018 which will further support the expansion of activities in the Middle East and Africa.

Greater attention to be paid on end consumers

The Group also relies on customers in its core markets. While sales in the established markets of North America and Europe were down in 2017, total end-user sales in a number of these markets increased. This applies in particular to the last months of the year. The company sees opportunities to grow again, especially in these regions. Here, Lego wants to work closely with trade partners to reach even more children. Christiansen: “We had a good start in 2018 and will stabilize the business next year by investing in great products and effective global marketing execution. There is no quick fix and it will take time to achieve long-term growth.”

Lego classics were particularly popular in 2017

The portfolio’s successful brands in 2017 included the classics Lego City, Lego Duplo, Lego Creator and Lego Friends. Lego Ninjago also benefited from the release of the film in September. The Lego Star Wars products that were launched in the second half of 2017 performed in line with expectations. For this year, the company has announced a number of innovations at the International Toy Fair, including a new Lego Duplo freight train, dinosaurs to mark the premiere of Jurassic World 2 and a Lego Technic model of the Bugatti Chiron.

 

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Link:www.lego.com

Image: Lego

//KH