LEGO Group owners’ private investment company loses $150 million in one day

KIRKBI A/S, the Kirk Kristiansen family’s private holding and investment company, has suffered a dramatic loss of $150 million in a single day.

ISS A/S, a Danish office-service firm, issued a profit warning last Wednesday, alerting investors to an imminent drop in profits. The announcement wiped 20% off the company’s market value, reports Bloomberg, which was bad news for the LEGO Group’s owners – because KIRKBI holds around 15% of ISS.

The holding company manages roughly $16 billion on behalf of the Kirk Kristiansens, in order to best leverage the family’s fortune for future activities, such as the LEGO Foundation. KIRKBI has 75% ownership of the LEGO Group, a 29.6% ownership of Merlin Entertainments, and has investments in renewable energy.

While other investors have built up short interest against ISS, to the tune of 7.5% of its share capital – nearly the highest among Danish companies – KIRKBI is apparently staying loyal to the company. The profit warning may have been the result of ISS CEO Jeff Gravenhorst’s recent strategy shift towards targeting bigger clients, at the expense of smaller customers.

In response to the statement, Gravenhorst admitted he’d been “too ambitious” with his plans for the company, but was intending to stand by them nonetheless. ISS’s chairman Charles Allen said that Gravenhorst has the backing of the board, but management needs to “execute better and faster”.

“We have faced some hurdles in the short term, but as guided in the outlook, we intend to return to our regular margin levels of around 5% in 2020,” Allen told Bloomberg. “Going forward, our focus on growth, margin and cash will deliver in 2020 and further improve in the medium term.”

ISS shares have continued to decline in the aftermath of the profit warning, but KIRKBI declined to comment to Bloomberg on its strategy going forward.

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