The LEGO Group has reported the company’s financial results for 2017, with a seven percent decline in revenue and a drop in profit.
Growth was elusive for the LEGO Group in 2017, as revenue and profit both declined. Revenue was down from 37.9 billion DKK to 35.0 billion DKK, with net profit down from 9.4 billion DKK to 7.8 billion DKK. The LEGO Group’s cash flow reduced from 9.4 billion DKK to 7.8 billion DKK. Despite the gloomy figures, the press release from the media team notes that although sales were flat year on year, they ‘trended upwards in the final months of 2017’.
Newly appointed CEO Neils B Christiansen responded to the results, suggesting that the LEGO Group is acting swiftly to address the perceived causes of the slowdown. “2017 was a challenging year and overall we are not satisfied with the financial results. However, we ended the year in a better position. In December, consumer sales grew in seven of our 12 largest markets and we entered 2018 with healthier inventories. In 2018, we will stabilise the business and invest to build sustainable growth in the longer-term.
“During 2017, revenue in our established markets declined, primarily due to actions we took to clean up inventories. This decline impacted our operating profits. We also simplified and reduced the size of the organisation to meet current business requirements and these difficult actions are now complete. Our balance sheet, cash flow and profitability, remain sound.
“We started 2018 in better shape and during the coming year we will stabilise the business by continuing to invest in great products, effective global marketing and improved execution. There is no quick-fix and it will take some time to achieve longer-term growth.”
The company reports that revenue in North America and Europe was down, but the total consumer sales in some areas within those markets improved. China, a growth area for the LEGO Group, had double-digit growth during 2017. The Middle East and Africa are other target regions, with the LEGO Group planning to open an office in Dubai later this year.
While LEGO City, LEGO Friends and LEGO Creator are all noted as success stories, performing ‘well’, LEGO Star Wars is only noted as having ‘performed in line with expectations’. The recent news that sustainable elements are being introduced this year is also an area that the LEGO Group is keen to highlight.