A policy of locating manufacturing close to markets and applying a focus on optimisation and improvement, helped Danish toy manufacturer Lego (Billund; www.lego.com) to report an operating profit increased by 40% year-on-year to DKK 7.95 bn (EUR 1.07 bn) on sales up 25% at DKK 23.4 bn. Sales were boosted by gains in markets globally, particularly in North America, Asia and central and eastern Europe.

Lego said that more than 60% of its sales are accounted for by new launches every year. Jørgen Vig Knudstorp, Lego CEO, said: “It is a highly satisfactory result and better than we expected at the beginning of the year. This is due, first and foremost, to the fact that we were able to develop and launch products that children all over the world have put at the top of their wish lists in 2012.”

The company’s best-selling products in 2012 were Lego “City” and “Star Wars”, followed by “Ninjago”, which was launched in 2011. The new product line, Lego “Friends”, delivered a “strategic milestone” in 2012, selling much better than expected and becoming the company’s fourth best-selling line.

Lego made significant investments during 2012 including the announcement of a major expansion of its existing factory in the Czech Republic – see Plasteurope.com of 14.11.2012 – the building of a factory in Hungary near its existing facility in Nyíregyháza, which was started in October, and a new Asian head office in Singapore, inaugurated in autumn.

However, the company’s packing facilities in Billund / Denmark, will close during the next 30 months as a result of a strategy to locate packing facilities closer to core markets – see Plasteurope.com of 12.02.2013. Simultaneously, large investments will be made in moulding and engineering capabilities in Billund, Lego said.

As a result of the increase in sales and investments in production capacity, the number of full time employees rose by just over 1,000 from an average of 9,374 in 2011 to 10,400 in 2012. The number of employees is also expected to increase in 2013.

Geographically, Lego saw its eighth consecutive year of growth in the US with consumer sales increasing by 26% compared with 2011, driving the company’s share of the overall US toy market to 7.9%. The company’s share of the US market has quadrupled in five years.

The launch of Lego “Friends” was also successful in the US, tripling the number of girls building with bricks and, measured in dollars, becoming the number-one product ranked among the dolls play sets segment.

Alongside the US, with double-digit growth rates, North America, Asia and central and eastern Europe showed improved sales results in 2012, while the growth rates in some southern Europe markets were more moderate but still in healthy single digits.

In 2013, Lego anticipates that sales will continue to grow, but the challenging global economic situation will result in lower growth rates than in 2012. However, the company expects a satisfactory result for the full year.