Lego builds up profits, hunts global talent
Billund (Denmark) (AFP) - Toy maker Lego posted rising annual profits and revenue on Thursday and said it would set up global management hubs to attract more foreign talent to the group's management.
"I'm very excited that it's the ninth consecutive year of organic growth," chief executive Joergen Vig Knudstorp said at a press conference at the family-owned company's headquarters in Billund, Denmark.
Net profit in 2013 rose 9.0 percent to 6.12 billion kroner (820 million euros, $1.12 billion).
Sales grew by 10 percent to 25.38 billion kroner, marking a quadrupling in just 10 years.
The profile of the 64-year-old privately held Danish company is currently riding high worldwide thanks to a smash-hit animated film, "The Lego Movie", which is succeeding with both critics and customers.
The results released Thursday, though, did not include any sales boost from the movie, which was released earlier this month, after the end of the group's fiscal year.
"The large US, British and Central and Northern European markets achieved healthy single digit growth rates, whereas markets like France, Spain, Russia and China grew double digits," Lego said.
The unlisted company said it expected the global market for traditional toys to experience flat to low-digit growth in 2014, but that the group would continue to outperform.
"During the coming years the Lego Group expects to grow moderately ahead of the global toy market," it said.
"This is expected to be achievable due to the group's continued focus on innovation and its commitment to global expansion," it added.
Lego expects an additional 600 to 800 people to join its target consumer group over the next decade in China, as more people there enter the urban middle class.
To meet burgeoning growth in developing markets and elsewhere, it aims to attract more international talent by setting up "major regional sites" in London, Singapore and Shanghai as well as at its existing facility in Connecticut in the US.
Each site will have a "significant top management presence," the company said.
"What we have found is that the brick, the building system and that creativity is not just a Danish idea," Vig Knudstorp said.
"It is equally relevant in any culture. This is one of the things I took home from my visits with Chinese children," he said.
"To take the bricks all over the world, we need a different kind of organisation. We need a set-up that is much more diverse, much more international than we are today," he said.
Lego's "Friends" collection, launched in late 2012 and aimed at girls between the ages of five and nine, and last year's hugely successful "Legends of Chima", where animal tribes battle for world dominance, added the most to sales growth.
But old-time favourites like "Lego City" and "Duplo" were also among the top sellers.
The group, which has come under fire in the Danish press for not branding itself as a Danish company, said it would continue to be headquartered in Billund.
But "it would be arrogant to think that simply because you are Danish you (know) what it takes to succeed in countries all over the world," Vig Knudstorp said.
The world's second-biggest toy company has staged a remarkable comeback since running into trouble in the 1990s, when it expanded into other sectors and failed to foresee the rise of big box retailers such as Wal-Mart and Toys'R'Us.
"Our company was not well positioned to operate in all of those new business areas," Vig Knudstorp told AFP.
"The company had lost focus on its core business," he added.
