The LEGO Group released today the company’s financial results for 2016. The company have highlighted an increase in revenue from 35.8 billion DKK in 2015 to 37.9 billion DKK in 2016, suggesting that significant investment in the future was a key part of the strategy in 2016. Net profit increased from 9.2 billion DKK to 9.4 billion DKK year on year compared on 2015.
Comments from the new CEO, Bali Padda, suggest that the company sees sales in the USA as disappointing and implies that even European sales were below expectations.
‘We are satisfied with our performance in 2016. We had a strong first half of the year, while consumer sales growth in the second half was at more sustainable levels than previous years. We were encouraged by our performance in mature markets in Europe and continue to see strong potential in China, which represents an attractive growth opportunity.
‘In the US, consumer sales were flat year-on-year despite a significant increase in marketing spend in the second half of the year. We will continue to work closely with our retail partners to identify new opportunities to innovate, drive growth and engage children in this important market.’
Here is the press release from The LEGO Group:
335 new products introduced in 2016
Revenue growth was driven by performance of core themes including LEGO® City, LEGO NINJAGO®, LEGO Friends, LEGO Technic, and LEGO Creator.
During 2016, more than 335 new items were launched, including LEGO NEXO KNIGHTS™, an innovative platform that combines digital and physical play.
“Innovation is critical to our success and each year around 60 percent of our portfolio is new products. We are constantly challenging ourselves to engage and inspire children with the most relevant, exciting and fun play experiences. This year we have strengthened our efforts around digital engagement, and found new ways to connect with children online and through a range of digital platforms,” said Padda.
In 2017, the company will introduce new platforms to inspire blended digital and physical play. LEGO Life, a safe digital platform to encourage children to share their building experiences was released in selected markets in February. LEGO BOOST, which combines coding and traditional building, will be launched in the second half of 2017.
Investing in sustainable global growth
In 2016, The LEGO Group continued to expand capacity and capability to support its global growth ambitions. DKK 2.9 billion was invested in property and building production capacity, including a new factory in China, and a net additional 1,760 people joined the organisation.
Padda said, “Our long-term ambition is to provide the opportunity for millions more children around the world to benefit from LEGO® play experiences, especially in emerging markets. In 2016, we invested significantly in the talent and infrastructure to enable this sustainable, long-term growth.”
Creating a positive impact
The LEGO Group’s mission is to inspire the builders of tomorrow and the Group prioritises initiatives that benefit future generations and positively impact the planet and society.
During 2016, the company made significant investments in programmes that address climate change and improve the sustainability of its operations.
The LEGO Group made a significant step to achieve its goal of balancing 100 percent of its global energy consumption with energy produced by its own renewable sources by 2020. In 2016, 90 percent of energy was balanced, and the company is on track to achieve its goal three years ahead of schedule.
Through its parent company KIRKBI A/S, it took its total investment in renewable energy to DKK 6 billion, with the announcement of the Burbo Bank Extension offshore wind farm in the United Kingdom. It continued its partnership with the World Wildlife Fund’s Climate Savers programme and met or exceeded all its targets, for example improving its energy efficiency by 13 percent between 2013 and 2016, against a target of 10 percent. However, for the full year of 2016, the Group did not meet its annual target on energy efficiency improvement.
The LEGO Group continued to make progress against its ambition to use only sustainable materials in its products by 2030. The Group began the design of its Sustainable Materials Centre dedicated to the project and in 2016 developed prototypes of next generation bricks made from sustainable sources. In addition, 93 percent of all waste and 100 percent of all waste from brick production was recycled.
The Group also took steps to protect the rights of children around the world and support those in need. In partnership with UNICEF, it developed an industry-first Digital Child Safety policy, to create safe online play experiences for children. It also worked with UNICEF, through an initiative called Partners in Play, to provide learning opportunities to Syrian refugee children in Jordan. Finally, through volunteering programmes, the Group’s employees engaged more than 100,000 children around the world in play experiences organised by local children’s charities, which operate in communities close to the company’s facilities.