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ENFIELD, Conn., Feb. 21 /PRNewswire/
Positive 2006 Results Contribute to Securing Future of The LEGO® Group
The LEGO Group’s strategy to focus on its core business as a means to securing
its future paid off in 2006, it was announced today during a press conference in
the company’s Billund, Denmark headquarters. With profits for the year amounting
to $271.7 million USD (DKK 1,562 million), LEGO Group is in a very strong
position heading into 2007.
Following the financial reconstruction of the company in 2004 and 2005, the
years 2006, 2007 and 2008 will focus on bolstering a profitable core platform,
with particular focus on continuing its measures to improve profitability and
service levels to its retail partners. The results for 2006 are an important
step in the implementation of the second phase of the company’s corporate
strategy and therefore contribute to securing the firm’s future.
North American sales of classic product lines such as LEGO® CITY, LEGO Racers
and the re-launched LEGO MINDSTORMS® developed more positively than expected.
Balanced by strong demand for home-grown, story-driven properties like BIONICLE®
and LEGO EXO-FORCE™, plus momentum for hot licenses like LEGO Star Wars™ and
LEGO SpongeBob Squarepants™, North American consumer demand for LEGO products
showed renewed strength.
“We are very pleased with our North American performance last year, with sales
growth in both the U.S. and Canada that outpaced the industry and increased our
construction category share in both markets,” said Soren Torp Laursen,
president, LEGO Systems, Inc., the North American division of the LEGO Group.
“Consumer demand for LEGO products was higher in 2006 than it has been in four
years, which underscores that our commitment to delivering a stronger core
offering and more balanced LEGO portfolio is exactly what consumers want. We’re
confident that continued innovation of the classic LEGO play experience will
help us maintain our foothold with consumers and lead us to growth.”
Laursen continued, “2006 was not only a strong year for LEGO with consumers, but
also for our retail partners, who saw considerable growth in their return on
investment in LEGO business over previous years, which is fully aligned with our
strategy to become a much more valued partner to our retailers. While the
results were strong, we did leave business on the table in the fourth quarter --
something we’re squarely focused on improving in 2007.”
Commenting on the global performance Jorgen Vig Knudstorp, CEO said:
“I consider the results very satisfactory. It clearly shows that there is plenty
of life and relevance in LEGO products and that our strategy of focusing on the
core of our brand is the right approach. We are however very much aware that,
despite the good results, we do not meet all our objectives in relation to being
a sustainable business. Despite the announcement in 2006 of the outsourcing of
most of the production, the employees delivered a great and impressive effort,
even though the pressure on the employees has without doubt been very heavy.
Furthermore, due to the unexpectedly great demand, we have not been able to meet
the retailers’ needs in a completely satisfactory way. In the coming years, we
will increase our focus on meeting our objectives in relation to all our
stakeholders”.
This year, LEGO Group will increase investment in outsourcing, IT improvements
and innovation as part of its continued focus on meeting objectives related to
stakeholders and retailers. On the whole, LEGO Group anticipates that the global
toy market will remain unchanged and therefore LEGO Group’s largest markets,
the USA and Germany, are expected to remain under pressure.
Notes to Editors:
-- Profit for the year before tax amounted to DKK 1,562 million ($271.7
million USD) against DKK 456 million ($79.3 million USD) in 2005. (In
2005, profit for the year before tax including discontinuing activities
was DKK 702 million ($122.1 million USD).
-- Net profit for the year amounted to DKK 1,430 million ($248.7 million
USD) against DKK 505 million ($87.8 million USD) in 2005, which gives a
return on equity of 34.4%.
-- The Group’s equity increased from DKK 3,589 million ($624.2 million
USD) at the end of 2005 to DKK 4,727 million ($822.1 million USD) at
the end of 2006.
-- Revenue amounted to DKK 7,823 million ($1.36 billion USD) against DKK
7,050 million ($1.23 billion USD) in 2005, an increase of 11%.
-- Profit before special items, financial income and expenses and tax
amounted to DKK 1,348 million ($234.4 million USD) against DKK 468
million ($81.4 million USD) in 2005. This corresponds to an operating
margin (ROS) of 19.5% against 6.5% in 2005.
-- The Group’s total cash flows were DKK 45m ($7.83 million USD) in 2005.
The total cash flows in 2005 were DKK 2,549m ($443 million USD) due to
the liquidity in connection with the sale of the LEGOLAND® parks.
About LEGO Systems
LEGO Systems, Inc. is the North American division of The LEGO Group, a
privately-held, family-owned company based in Billund, Denmark, one of the
world’s leading manufacturers of creatively educational play materials for
children. The company is committed to the development of children’s creative and
imaginative abilities, and its employees are guided by the motto adopted in the
1930s by founder Ole Kirk Christiansen: “Only the best is good enough.” Visit
the virtual LEGO world at http://www.lego.com/
NOTE: LEGO, the LEGO logo, EXO-FORCE, MINDSTORMS and BIONICLE are trademarks of
the LEGO Group. ©2007 The LEGO Group.
MEDIA CONTACT:
LEGO Systems, Inc.
Michael McNally
860-763-7825 / press@LEGO.com
Website: http://www.lego.com/
Link: http://sev.prnewswire.com/entertainment/20070221/SFW06721022007-1.html
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