Hot LEGO News – LEGO unveiled their financial results for the initial half of 2023, revealing a growth in sales and revenue, albeit not as significant as the corresponding period in 2022. Read on for the details in full.
For the first half of 2023 revenue reached DKK 27.4 billion, showing a one percent increase compared to H1 2022. Despite a decline in the toy market, consumer sales grew by three percent, leading to a significant market share growth. Operating profit met expectations, reaching a solid DKK 6.4 billion, compared to an exceptionally strong DKK 7.9 billion in H1 2022. The company continues to prioritize investments in long-term strategic initiatives, such as manufacturing, digitalization, and sustainability.
CEO Niels B Christiansen said: “We are satisfied with our performance; especially as it has been a challenging six months for the toy industry. Demand for our products saw us outpace the industry and significantly grow market share.
“Our strong financial position allows us to invest for the long term, particularly in areas such as digital, sustainability and manufacturing. Overall, our performance is in line with expectations, after three consecutive years of extraordinary growth and we are grateful for our great colleagues who work each day to inspire children through play.”
Financial Overview
The growth in consumer sales was driven by the continuous demand for products and strong confidence from retailers. Despite the impact of inventory management by retailers, revenue remained flat when compared to the record first half revenues in 2022, growing by one percent as reported and remaining unchanged in constant currency. In the first half of 2023, net profit amounted to DKK 5.1 billion, a decrease from DKK 6.2 billion in the same period of the previous year. Furthermore, free cash flow for this period was DKK 1.1 billion, reflecting planned investments in expanding manufacturing capacity globally and upgrading technology, compared to DKK 3.8 billion in the corresponding period last year.
Market Performance
In established markets like the Americas, consumer sales experienced growth. However, in China, consumer sales were affected by a slower recovery in pre-pandemic shopping habits, falling short of initial predictions. To expand its reach among children, the company plans to further develop its retail footprint and online presence in China from 2023 onwards.
Portfolio and Brand Performance
The LEGO Group is set to offer a wide range of over 750 products in 2023, catering to builders of various ages and interests. With approximately half of the portfolio being refreshed annually, it
exemplifies the ingenuity and inventiveness of their skilled designers. The most successful themes during the first half included both original creations and collaborations, featuring LEGO® Icons, LEGO Star Wars™, LEGO Technic™, and LEGO City. In March, the company introduced LEGO DREAMZzz™, their own imaginative intellectual property, with pre-release content showcased on major streaming and kids content platforms before products hit the market in August. The ongoing collaboration between the LEGO Group and Epic Games is progressing well, focusing on delivering entertaining and secure digital experiences for children. Further updates on this partnership are expected to be shared in the near future. Recognized as the world’s most reputable brand by RepTrak in April, the LEGO brand continues to maintain its strength and popularity.
Strategic Initiatives to Drive Long-term Growth
The company stepped up strategic initiatives to deliver sustainable long-term growth and relevance.
- Expanding Global Manufacturing Network
The LEGO Group began construction on a new factory in Virginia, US, in April and continued work on a factory in Vietnam. Both facilities represent significant investments of USD 1 billion (DKK 6.7 billion) and strive to achieve carbon neutrality upon completion in 2025 and 2024 respectively. Additionally, LEGO factories in Mexico, Czech Republic, Hungary, and China have expanded their capacities. These investments fortify the company’s global manufacturing network, which positions production closer to key markets, ensuring a short and efficient supply chain capable of meeting shifting consumer demands and reducing environmental impact.
- Building a Sustainable Future
The LEGO Group has made significant strides in various initiatives to minimize its environmental impact. During the first half, the company made progress in transitioning to paper-based pre-packs and established a partnership with European Energy to develop e-methanol, which holds potential for future product usage.
In pursuit of reducing its carbon footprint, The LEGO Group aims to triple its investment over the next three years. This investment will be directed towards adopting more sustainable materials, expanding the utilization of renewable energy, and working towards the target of reducing carbon emissions by 37 percent by 2032. Furthermore, the company has committed to achieving net-zero greenhouse gas emissions across its entire supply chain by no later than 2050.
- Transforming Shopper Experience Through Digital
As a component of its digital revolution, the organization implemented advanced technology that significantly enhanced customer experiences within the initial half-year period. This encompassed the introduction of an in-store point-of-sale application and novel digital tools that facilitated the orderly movement of orders between warehouses, effectively reducing delivery times. Furthermore, the company diligently pursued its planned expansion of the digital workforce and anticipates
employing approximately 1,800 digital colleagues across four prominent locations by year-end: Billund, Copenhagen, London, and Shanghai.
- Memorable Retail Experiences
The company is continuously growing its worldwide network of LEGO branded stores, creating unforgettable brand experiences for shoppers. During the first half of 2023, it launched 89 new stores, bringing the total number to 988 globally. Additionally, the company has been enhancing its e-commerce capabilities and performance across its own platforms as well as partner platforms.
Inspiring Future Generations
The LEGO Group holds the belief that children can develop lifelong skills and unlock their potential through learning via play. In the initial half of 2023, product donations and engagement in local communities positively impacted over 4.3 million children.
Niels B Christiansen said: “We remain fully focussed on our ambition to inspire and develop more children around the world. We are proud to be in a strong financial position to deliver on this mission today and invest to ensure we continue to deliver for many generations in the future.”
