LEGO
Full-year profits down as revenues fall / Toy maker sees business stabilising in 2018 / Launch of sustainable bricks
 Lego is launching sustainable bricks made from plant-based plastic in 2018 (Photo: Lego) |
Toy manufacturer Lego (Billund / Denmark; www.lego.com) reported a 17% decline in last year’s operating profit at DKK 10.4 bn (EUR 1.4 bn) after revenue shrunk 8% to DKK 35 bn on the back of declining sales in North America and Europe.
Net profit stood at DKK 7.8 bn, down 17% and pretax profit decreased 18% to DKK 10.2 bn. The operating profit margin was 29.6% against 32.8% in 2016. CEO Niels Christiansen said, “2017 was a challenging year and overall we are not satisfied with the financial results. However, we ended the year in a better position.”
Global consumer sales were flat but improved in the final months of 2017. In December, consumer sales grew in seven of Lego’s 12 largest markets.
Lego said the revenue drop was partly a result of reducing inventories “across its value chain.” The decline, the first since 2004, came amidst low single-digit growth in the global market for traditional toys last year.
Last September, Lego announced slashing its workforce by 8%, noting that the restructuring would impact costs and meant an inventory “clean-up” (see Plasteurope.com of 07.09.2017). In its 2017 report, the termination and restructuring costs totalled DKK 232m. Lego also booked DKK 100m impairment loss on assets.
Commenting on 2018, Lego said it sees strong potential in China, where revenue grew strong “double-digits” in 2017. On longer-term it forecasts the whole group to grow “low single digits in line with the global toy market.”
Christiansen said Lego entered 2018 with healthier inventories and expected business to stabilise in 2018. “There is no quick-fix and it will take some time to achieve longer-term growth,” he added.
Lego announced separately that it has started producing “Lego” elements made from plant-based plastic that is sourced from sugarcane. The first “sustainable” elements will be botanical pieces such as leaves, bushes and trees. They will already be included in Lego boxes in 2018. The plastic is made from ethanol produced from sugarcane and has the same properties as conventional polyethylene. The plant-based plastic makes up 1-2% of the total amount of plastic elements Lego produces.
The Danish toy group has partnered with the WWF to support and build demand for sustainably sourced plastic, and has joined the Bioplastic Feedstock Alliance (BFA, www.bioplasticfeedstockalliance.org – see Plasteurope.com of 11.12.2013), an initiative of WWF, to help drive sustainable raw material sourcing for the bioplastics industry. Lego already has a partnership with WWF, as part of efforts to reduce its CO2 emissions – see Plasteurope.com of 10.07.2017.
Net profit stood at DKK 7.8 bn, down 17% and pretax profit decreased 18% to DKK 10.2 bn. The operating profit margin was 29.6% against 32.8% in 2016. CEO Niels Christiansen said, “2017 was a challenging year and overall we are not satisfied with the financial results. However, we ended the year in a better position.”
Global consumer sales were flat but improved in the final months of 2017. In December, consumer sales grew in seven of Lego’s 12 largest markets.
Lego said the revenue drop was partly a result of reducing inventories “across its value chain.” The decline, the first since 2004, came amidst low single-digit growth in the global market for traditional toys last year.
Last September, Lego announced slashing its workforce by 8%, noting that the restructuring would impact costs and meant an inventory “clean-up” (see Plasteurope.com of 07.09.2017). In its 2017 report, the termination and restructuring costs totalled DKK 232m. Lego also booked DKK 100m impairment loss on assets.
Commenting on 2018, Lego said it sees strong potential in China, where revenue grew strong “double-digits” in 2017. On longer-term it forecasts the whole group to grow “low single digits in line with the global toy market.”
Christiansen said Lego entered 2018 with healthier inventories and expected business to stabilise in 2018. “There is no quick-fix and it will take some time to achieve longer-term growth,” he added.
Lego announced separately that it has started producing “Lego” elements made from plant-based plastic that is sourced from sugarcane. The first “sustainable” elements will be botanical pieces such as leaves, bushes and trees. They will already be included in Lego boxes in 2018. The plastic is made from ethanol produced from sugarcane and has the same properties as conventional polyethylene. The plant-based plastic makes up 1-2% of the total amount of plastic elements Lego produces.
The Danish toy group has partnered with the WWF to support and build demand for sustainably sourced plastic, and has joined the Bioplastic Feedstock Alliance (BFA, www.bioplasticfeedstockalliance.org – see Plasteurope.com of 11.12.2013), an initiative of WWF, to help drive sustainable raw material sourcing for the bioplastics industry. Lego already has a partnership with WWF, as part of efforts to reduce its CO2 emissions – see Plasteurope.com of 10.07.2017.
08.03.2018 Plasteurope.com [239210-0]
Published on 08.03.2018
German version of this article...