Lego bricking it: toy manufacturer announces reduced profits for first time in 13 years

Figures out this week show poor returns compared to the previous year

In 2005, Lego dodged financial ruin to become a prominent symbol of corporate success in Denmark. However, there are signs this could soon be about to change.

Recent figures posted by the company showed it made a considerable loss in 2017 compared with the previous year.

Revenue fell 7 percent from 37.9 billion kroner in 2016 to 35 billion kroner in 2017. Total profits were also down, from 9.4 billion kroner to 7.8 billion kroner – a drop of around 17 percent.

A spokesperson for Lego attributed the loss to an over-production of bricks in the past year. This, she suggested, meant the manufacturer was forced to sell off large quantities of stock at reduced rates.

New order working?
In the autumn Lego appointed a new boss, Niels B Christiansen, the former chief executive of Danish heating and engineering firm Danfoss.

He spearheaded a major savings program late last year in which 1,500 employees were sacked – 600 of whom were based in Denmark.

Despite this decisive action, the financial data from 2017 will remain a concern for investors.

Looking forwards
Christiansen insisted that in spite of the reported losses, Lego had performed well in seven of its largest markets.

One of the countries where he predicted the company would have strong future growth was China.

In December 2017, Lego won a legal challenge against the Chinese firm Lepin. Courts in the country ruled the Danish corporation’s copyright had been severely infringed.

The legal decision paved the way for Lego to challenge others in the country that might try to steal the brand’s market share by replicating its iconic toy design.

READ MORE: Lego wins critical copyright case in China