Children’s constructor manufacturer Lego reported a 19% drop in revenue for the first half of 2023. This is a record decline in the company’s history over the past twenty years.
The company said that the decline in revenue followed higher raw material costs and increased investment in new factories, software development and sustainability initiatives. In addition, market pressure is being exerted by a “very challenging” situation in the toy industry.
Lego’s operating profit for the first half of 2023 fell to DKK6.4 billion ($938.7 million). A year ago, the figure was DKK 7.9 billion ($1.16 billion). Lego said the result for the year’s first half was broadly aligned with the company’s expectations. The company posted revenue of 27.4 billion crowns ($4.02 billion).
Lego CEO Niels Christiansen said the company performed better than the struggling toy industry and strengthened its position as the largest manufacturer in revenue and profit.
The company emphasized that Lego is now far from the situation in 2018 when its sales and profits were falling and the company was losing market share. The company is building new factories in Vietnam and the US, opening in 2024 and 2025 respectively. In addition, the company is expanding four of its five existing plants.
Despite relatively weak operating performance in the first half of the year, Lego is well ahead of US rivals Mattel and Hasbro in revenue – they earned $1.9 billion and $2.2 billion respectively in the period under review.
