Lego Steams Ahead Despite Struggling Toy Market

Lego cemented its position as the world's biggest toymaker last year despite logging its first decline in net profit since 2017 and slumping sales in China, company results showed Tuesday.

The Danish toy giant's overall sales inched up by two percent to 65.9 billion kroner ($9.6 billion), a record sum for the family company that continues to gain market share.

Sales made directly to consumers through Lego's physical and online stores rose by four percent in a challenging year as high inflation weighed heavily on the industry.

Its net profit fell five percent to 13.1 billion kroner amid a 60-percent rise in spending on green initiatives as it tries to find alternative materials for its colourful plastic bricks.

It also boosted investments by 27 percent in technology modernisation and innovation.

Lego posted three years of record-breaking sales during the Covid pandemic lockdowns, and shows no sign of slowing down.

The unlisted family-owned company never reveals detailed market share figures, but according to market data consultancy group Statista, Lego has been the world's biggest toymaker since 2020 with a 14-percent market share in 2022.

"In five years we've grown 81 percent organically, where the market has grown 12 percent," Lego chief executive Niels Christiansen told AFP in an interview.

He said the company expects to see more of the same in 2024.

"Every year we've taken market share and the outlook for this year is that we would continue to take," he added.

A small dark cloud was a decline in sales in China.

"In China the economic conditions in the country are severe enough that many consumers have been holding back a little bit, maybe buying the same number of Lego sets but those a little bit lower in price," Christiansen explained.

With a record 780 products in its portfolio, Lego doesn't have to worry about being dependent on the success of a single toy or game.

"We're not the type of company that has 25 percent of sales on one product," the chief executive said.

The company's bestsellers are its flagship product ranges Lego City and Lego Technic, the Star Wars and Harry Potter franchises, as well as Lego Icons for older builders.

In December, the company, whose name is a contraction of the Danish words "play well" (Leg godt), also tied up with video game leader Epic Games to launch Lego Fortnite.