LEGO Group announces 2010 results

[Bonaparte]

Billund, 3 March 2011

The LEGO Group increases its market share

2010 was another good year for the LEGO Group. In a global toy market making a slow recovery the company succeeded once again in capturing market shares and is now the world’s fourth-largest toy manufacturer. Its global market share rose from 4.8% at the close of 2009 to approx. 5.9% at end 2010. This is revealed in the Group’s annual accounts published today. Key figures from the accounts highlight the fact that the high rate of growth in 2009 was maintained undiminished in 2010.

• Profit for the year before tax increased to DKK 4,889 million compared with DKK 2,887 million in 2009.
  
• Net profit for the year increased to DKK 3,718 million compared with DKK 2,204 million in 2009.
  
• Group equity rose to DKK 5,473 million at end 2010 compared with DKK 3,291 million at end 2009.
  
• Revenue increased by 37.3% to DKK 16,014 million from DKK 11,661 million in 2009. “The result is extremely satisfactory and is due in part to vigorous growth in markets such as the USA, UK, Russia and Eastern Europe – all identified as growth markets for the company,” says CEO Jørgen Vig Knudstorp.
  

Global growth

The Group has been capturing market shares in all its markets, and although Europe is the part of the world in which consumers already own most LEGO® bricks, growth has been double digit in most European countries, too.

Classic ranges such as LEGO City, LEGO DUPLO® and LEGO Star Wars™ were especially popular with consumers in 2010 but virtually all product lines sold more than expected.

The new online game LEGO Universe, which reached the market towards the end of 2010, did not live up to its initial sales expectations and had only a limited effect on revenue.

The new board game series based on LEGO bricks, LEGO Games, introduced in selected markets in 2009, launched globally in 2010 and achieved significant sales growth.

Higher stock levels supported Christmas sales

During 2010 the LEGO Group continued the process of recent years of expanding its production and warehousing capacity. A new warehouse was built at the factory in Kladno, Czech Republic, and a new moulding shop is under construction at the factory in Monterrey, Mexico. The first LEGO bricks from this new facility will be moulded later this year. In addition, design work is in progress for a new administrative building in Billund, Denmark.

These expansions have been driven by recent years’ high growth in sales, and in 2010 the Group’s improved in-stock situation meant that it was able to keep retailers’ shelves stocked with LEGO products throughout the busy re-Christmas period. That helped towards extremely fine Christmas sales.

Backed by the present level of investment, the LEGO Group expects to be able to maintain and improve upon the high level of supply reliability for its customers.

To meet the needs of increased production and rising sales, the LEGO Group has increased its workforce to an average of 8,365 full-time employees. This is a sharp increase of 1,079 full-time employees compared with 2009.

Focus on the environment

The LEGO Group is taking active steps to reduce its impact on the environment – for example, by making more efficient use of energy. In 2010 the Group significantly exceeded the targeted 10% improvement in energy efficiency compared to 2007. In addition, its target for 2015 is to supply half of its energy consumption from renewable sources – rising to 100% by 2020. The LEGO Group has also become a safer workplace. In 2010 workplace-accident rates fell by 38% compared with 2009. The company’s aim is to reduce the frequency of workplace accidents by a further 80% by 2015 to become one of the safest workplaces in the world. All non-financial figures can be found in the LEGO Group’s ‘Progress Report 2010’.

Growth expectations in 2011

In 2011 a modest growth is expected in the global market for traditional toys, and the LEGO Group also expects sales to increase during the year – although not at the rate enjoyed in 2010.

Jørgen Vig Knudstorp says:

“We expect growth both in our primary markets in North America and Europe and in emerging,rapidly growing markets, including China. Our classic product lines as well as new themes such as LEGO Ninjago have got off to a good start in the new year.”

[fred67]

Interesting, it's always good to see our favorite company doing so well.

One thing that struck me is that I don't see any indicator of sales. Instead, what we see this year is the boasting that they took over market share (increasing their market share by nearly 25%)... but if global sales are down for other companies, they could have achieved that without increasing sales.

That makes it hard for me to whine... assuming increased sales, but not 68% (which is how much net profit rose), they continue to raise their profit margins on sets, but it's hard to figure out by how much. Clearly no savings from cost cutting are passed onto the consumer, which will leave some of us complaining about "Chinese" LEGO (not me, however; from my experience it's "good enough").

Not that they're not entitled... it's a capitalistic business just like everyone else, but it's something I think people should know... most of us would rather pay extra for the great quality of LEGO (I know I would), but when they cut quality AND increase prices, that's something people might want to consider.

[Hive]

Old news: http://www.eurobricks.com/forum/index.php?showtopic=51425

[Bonaparte]

Old news: http://www.eurobricks.com/forum/index.php?showtopic=51425

Not really, because LEGO announced their 2010 results today and that other thread is from end January.

[davee123]

[the LEGO Group] is now the world’s fourth-largest toy manufacturer. Its global market share rose from 4.8% at the close of 2009 to approx. 5.9% at end 2010.

Does anyone know the approximate values of global market share for the other major players? I'm guessing Mattel, Hasbro, Bandai, then LEGO? I see several reports listing that LEGO now has the #3 spot in the UK and USA.

DaveE

[Aanchir]

The Annual Report was a good read, but this year for a change I found more things of interest in the Sustainability Report:

To ensure that we manage products categorized outside our core business in a controlled and structured way, we have for internal use set up a so-called traffic light guideline which has categorized a large number of product types in red, green, and yellow categories. These categories respectively define whether a product type is a no-go, requires a risk assessment, or can be immediately released. This way, we systematically prevent the LEGO brand from being associated with inappropriate or controversial products.

As an example, we have concluded that food products do not seem to support the essence of the LEGO brand. At the same time, the food category is a “hot topic” involving strong expert opinions, and is perceived differently in different regions. Therefore, we have red-listed food categories within licensing and non-core product, the only exception being when they are “wrapped inside” a branded LEGO experience, such as a LEGOLAND park visit.

So I guess we won't be seeing any more LEGO-brand fruit snacks. I'm sure they won't be missed. Continuing further:

A large number of LEGO minifigures use weapons, and are – assumedly – regularly being charged by each others’ weapons as part of children’s role play. In the LEGO Group, we acknowledge that conflict in play is especially prevalent among 4-9-year-old boys. An inner drive and a need to experiment with their own aggressive feelings in order to learn about other people’s aggressions exist in most children. This in turn enables them to handle and recognize conflict in non-play scenarios. As such, the LEGO Group sees conflict play as perfectly acceptable, and an integral part of children’s development.

We also acknowledge children’s well-proven ability to tell play from reality. However, to make sure to maintain the right balance between play and conflict, we have adhered to a set of unwritten rules for several years. In 2010, we have formalized these rules in a guideline for the use of conflict and weapons in LEGO products. The basic aim is to avoid realistic weapons and military equipment that children may recognize from hot spots around the world and to refrain from showing violent or frightening situations when communicating about LEGO products. At the same time, the purpose is for the LEGO brand not to be associated with issues that glorify conflicts and unethical or harmful behavior.

Nice to see that the weapons policy is finally enumerated, so people will no longer have to complain about LEGO being inconsistent. Granted, we don't know how the guidelines are phrased or how strictly they'll be followed, so there could still be some wobble room, but it's nice to have something to quote when people complain about constraction sets and licensed themes "glorifying violence."

[Blondie-Wan]

The Annual Report was a good read, but this year for a change I found more things of interest in the Sustainability Report:

So I guess we won't be seeing any more LEGO-brand fruit snacks. I'm sure they won't be missed. Continuing further:

Nice to see that the weapons policy is finally enumerated, so people will no longer have to complain about LEGO being inconsistent. Granted, we don't know how the guidelines are phrased or how strictly they'll be followed, so there could still be some wobble room, but it's nice to have something to quote when people complain about constraction sets and licensed themes "glorifying violence."

You're interested in many of the same things I am, it seems. Thanks for the link; I'll check that out myself.

[Captain Becker]

Great job Lego! Sounds great, im glad at Lego is taking the global warming and other nature problems seriosly.

And im glad to hear at Lego is going well, and im sure at the upcoming themes (POTC, Cars and the Alien conquest) will sell very good. I hope all good for Lego company and its employees, may we have yet many great adventures

Captain Becker

Edited March 4, 2011 by Captain Becker