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LEGO satisfied with profits after long period of struggle


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#1 johnsocal

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Posted 22 February 2007 - 12:05 AM

More good news.

http://jurnalo.com/j...?story_id=19183

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Lego satisfied with profits after long period of struggle

Wednesday 21 February 2007

Ratingvote -Danish toy maker Lego said Wednesday it was "most satisfied" after nearly tripling its after-tax profits in 2006 to 1.4 billion kroner (246 million dollars) following a long period of struggle. The positive result was mainly due to a new business strategy, company chief Jorgen Vig Knudstorp said when presenting the family- owned firm's financial statement.

Turnover rose to 7. 8 billion kroner, up by 11 per cent.

Lego had been struggling with declining turnovers and increasing losses since the 1990s, when children all over the world started playing more with computers and less with plastic bricks.

After its sale of all four Lego family holiday parks, huge job cuts and a return to the traditional core business, Lego also moved its toy production from its headquarters in Billund in the Jutland region into eastern European countries in 2006.

For the current year Knudstorp predicted another "marked fall in profits" with losses in turnover caused by a worldwide stagnation of the toy market.

Especially important Lego market outlets such as the US and Germany were "under pressure. " Lego suffered delivery bottlenecks during the crucial Christmas business due to the move of its production.

http://biz.yahoo.com...w067.html?.v=94


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Positive 2006 Results Contribute to Securing Future of The Lego Group

Wednesday February 21, 3:23 pm ET


ENFIELD, Conn., Feb. 21 /PRNewswire/ -- The LEGO Group's strategy to focus on its core business as a means to securing its future paid off in 2006, it was announced today during a press conference in the company's Billund, Denmark headquarters. With profits for the year amounting to $271.7 million USD (DKK 1,562 million), LEGO Group is in a very strong position heading into 2007.



Following the financial reconstruction of the company in 2004 and 2005, the years 2006, 2007 and 2008 will focus on bolstering a profitable core platform, with particular focus on continuing its measures to improve profitability and service levels to its retail partners. The results for 2006 are an important step in the implementation of the second phase of the company's corporate strategy and therefore contribute to securing the firm's future.

North American sales of classic product lines such as LEGO® CITY, LEGO Racers and the re-launched LEGO MINDSTORMS® developed more positively than expected. Balanced by strong demand for home-grown, story-driven properties like BIONICLE® and LEGO EXO-FORCE™, plus momentum for hot licenses like LEGO Star Wars™ and LEGO SpongeBob Squarepants, North American consumer demand for LEGO products showed renewed strength.

"We are very pleased with our North American performance last year, with sales growth in both the U.S. and Canada that outpaced the industry and increased our construction category share in both markets," said Soren Torp Laursen, president, LEGO Systems, Inc., the North American division of the LEGO Group. "Consumer demand for LEGO products was higher in 2006 than it has been in four years, which underscores that our commitment to delivering a stronger core offering and more balanced LEGO portfolio is exactly what consumers want. We're confident that continued innovation of the classic LEGO play experience will help us maintain our foothold with consumers and lead us to growth."

Laursen continued, "2006 was not only a strong year for LEGO with consumers, but also for our retail partners, who saw considerable growth in their return on investment in LEGO business over previous years, which is fully aligned with our strategy to become a much more valued partner to our retailers. While the results were strong, we did leave business on the table in the fourth quarter -- something we're squarely focused on improving in 2007."

Commenting on the global performance Jorgen Vig Knudstorp, CEO said:

"I consider the results very satisfactory. It clearly shows that there is plenty of life and relevance in LEGO products and that our strategy of focusing on the core of our brand is the right approach. We are however very much aware that, despite the good results, we do not meet all our objectives in relation to being a sustainable business. Despite the announcement in 2006 of the outsourcing of most of the production, the employees delivered a great and impressive effort, even though the pressure on the employees has without doubt been very heavy. Furthermore, due to the unexpectedly great demand, we have not been able to meet the retailers' needs in a completely satisfactory way. In the coming years, we will increase our focus on meeting our objectives in relation to all our stakeholders".

This year, LEGO Group will increase investment in outsourcing, IT improvements and innovation as part of its continued focus on meeting objectives related to stakeholders and retailers. On the whole, LEGO Group anticipates that the global toy market will remain unchanged and therefore LEGO Group's largest markets, the USA and Germany, are expected to remain under pressure.


#2 Hobbes

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Posted 22 February 2007 - 10:01 AM

The set design mostly has become better, true. Quality hasn't really, though. And the prices have increased.

Less production cost, higher turnover, of course they're satisfied...

#3 snefroe

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Posted 22 February 2007 - 01:16 PM

well i guess quality has improved for city and has always been high for sw sets... It's not a coincidence that both sold very well in 2004-2006. they also pushed prices down so Lego is cheaper now, or in any case within the pricerange of what people are willing to spend on toys for their kids. My only fear is that they're dependant on marketeer's visions too much, like no female figs, no smaller city substance sets "because the young boys won't be happy with that..." Some more guts in the city line would be nice...

#4 Hobbes

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Posted 22 February 2007 - 01:45 PM

View Postsnefroe1, on Feb 22 2007, 01:16 PM, said:

well i guess quality has improved for city
Not with the bricks, that's the quality I was referring to. And it's definitely not as good as it could be. Not to mention that I had a run of 7(!) bigger Technic sets with pieces (once even an entire poly bag) missing.

Seems they fired their entire QM department. Saves some costs, too, and adds to the satisfaction since there's no one there anymore who annoys the higher-ups with complaints about bad product quality and production re-runs and so on...

#5 maiq the liar

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Posted 22 February 2007 - 02:11 PM

Ech, just to keep them open... *holds up the 20$ to my name*
*does the MOSKAU dance*
Are my dark ages over yet?
...
God, finally.

#6 Serengeti

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Posted 22 February 2007 - 03:01 PM

The quality has definitely gotten worse to say the least but the costs are rising if anything so no surprise of some profits. I have had broken pieces included in 2 sets bought in 2 different shops towards the end of last year. One of them a unique piece that cannot be replaced easily.

The thing is I never had a broken piece in the hundreds of sets I got in the 1980s and 90s. I am certain they have cut back on the quality control aspect for cost savings. I have also noticed that some bricks in the sets last year had imperfections never seen previously.  

Anyway, to me it is not a huge big deal as I don't make their official sets but make my own Mocs as I think the quality of their designs is...

However, if I was a young kid who wanted to have that airport correctly made as the instructions show, I might be a bit p....d off.
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#7 johnsocal

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Posted 22 February 2007 - 09:52 PM

View PostCalvin, on Feb 22 2007, 03:01 PM, said:

The quality has definitely gotten worse to say the least but the costs are rising if anything so no surprise of some profits. I have had broken pieces included in 2 sets bought in 2 different shops towards the end of last year. One of them a unique piece that cannot be replaced easily.


The lack of durability in the ABS plastic LEGO part could be do to the cost cutting method of adding 'filler' to the plastic. Adding 'filler' allows a pound of ABS plastic to make more parts and therefore helps reduce the cost to make each piece. The unfortunate consequence that it can reduce the structural integrity of some parts and make them more prone to visual imperfections and/or warping.

'Black' ABS plastic is actually cheaper than colored ABS plastic because it doesnt require color-matching and etc. So it's actually cheaper for LEGO to make sets with black pieces (like Batman) then it is for them to offer lots of colorful bricks and etc.

#8 Berry Syedow

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Posted 23 February 2007 - 04:22 AM

View Postjohnsocal, on Feb 22 2007, 01:52 PM, said:

The lack of durability in the ABS plastic LEGO part could be do the the cost cutting method of adding 'filler' to the plastic. Adding 'filler' allows a pound of ABS plastic to make more parts and therefore helps reduce the cost to make each piece. The unfortunate consequence that it can reduce the structural integrity of some parts and make them more prone to visual imperfections and/or warping.

'Black' ABS plastic is actually cheaper than colored ABS plastic because it doesnt require color-matching and etc. So it's actually cheaper for LEGO to make sets with black pieces (like Batman) then it is for them to offer lots of colorful bricks and etc.
Bleh, I would be most distraught if TLC admitted to using filler. (Do you know what type of materials companies that produce plastic products would normally use as filler?) I don't suppose it would also be the instigator cracks?  I own several Star Wars mini-figs whose torsos or arms have cracked.  I even found a crack in the arm of a luke mini-fig (dressed in the orange jumpsuit) from the AT-AT (in old grey) only a few months after building the set.

#9 Zaktan of the Shadows

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Posted 23 February 2007 - 08:24 PM

Thats good news! And bad too. But, yah.

-ZotS


#10 johnsocal

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Posted 23 February 2007 - 11:49 PM

more related news :


http://denmark.dk/po...c_itemid=939471
  

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February 2007

Lego: a 'surprisingly' strong 2006

The joy is back in the town of Billund as toy maker Lego announces profits for the second year running


Toy maker Lego announced surprisingly strong 2006 profits Thursday, raising hopes that with a second year in the black the company may finally be out of the woods, reported financial daily Børsen.

Lego reported that 2006 pre-tax profits tripled to DKK 1.6 billion (EUR 213 million) on stronger sales and continued cost saving measures implemented after two years of multi-billion kroner losses.

'The survival plan we created in 2004 has worked beyond our expectations,' said chief executive Jørgen Vig Knudstrup during yesterday's presentation. 'The fundamental changes to the Lego company work.'

The tripling came after second quarter forecasts that the company would end the year with a DKK 700 million profit. But the make-or-break Christmas season was good to Lego, with demand so high that production was unable to keep pace.

Despite the positive news, Knudstorp warned investors not to expect a similar performance in 2007. Much of the improved sales resulted from a slow year on the toy market, which allowed a number of Lego's classic building blocks to regain market share.

'Our tailwind can quickly turn to a headwind,' he said. 'We expect a number of major launches of toys in the fad category this year, and the new Playstation 3 is coming. We aren't sure how that will affect us.'


While the company's new Mindstorm robots were the company's biggest individual seller, earning DKK 100 million, it was, according to Kundstorp, an increased focus on the classic building sets that are forming the foundation for Lego's future. The basic Lego City line dominated sales, earning over DKK 1 billion.

'We've focused on creating a company that is honest to the founding Lego values,' he said. 'We need to give kids a fun, creative and high quality way of playing,'

The Copenhagen Post


#11 KMOI

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Posted 24 February 2007 - 12:47 AM

Hmm, odd. I haven't ran into problems in terms of plastic quality. Then again, I haven't bought many LEGO sets this past year.  :-P  The only gripe I have is with the rampant use of stickers everywhere. Ungh, I really wish that they would just print it on the brick for the harder to apply stickies.

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Despite the positive news, Knudstorp warned investors not to expect a similar performance in 2007. Much of the improved sales resulted from a slow year on the toy market, which allowed a number of Lego's classic building blocks to regain market share.

'Our tailwind can quickly turn to a headwind,' he said. 'We expect a number of major launches of toys in the fad category this year, and the new Playstation 3 is coming. We aren't sure how that will affect us.'


"Fad catagory"? Hmm... Well, I do know there's going to be a massive influx of transforming figures out there from not only the Transformers movie, but also from Mattel (Batman, Hotwheels). But isn't the Playstation 3 out already? LEGO currently seems fine to me at the moment...

#12 Optimax X

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Posted 24 February 2007 - 02:07 PM

Huzzah! I feel a party coming on...... X-D  This is pleasing, i have been a lego fan since i was 5, so seeing it go down in my child life would be devestating for me. Looks like it won't happen though, keep up the good work lego!




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