LEGO Company reports profit of DKK 626m

March 19 2003

The LEGO Company returned a pre-tax profit of DKK 626m in 2002 compared with DKK 532m the previous year on sales of DKK 11,426m compared with DKK 10,670m.

The figures were reported in the accounts of the LEGO Company, published in Billund on Wednesday. Kjeld Kirk Kristiansen, President and CEO, said of the result that it was “in the circumstances a good year”.

The improvement reflects the fact that sales increased in more or less all areas. All of the Company’s main markets enjoyed a rise in turnover. And although the large American market lost some of its impetus during the year, the period nevertheless ended with sales 5% up on 2001. The biggest increase in 2002 was in southern Europe, where sales rose by almost 20%.

The opening of a new LEGOLAND Park in Germany also boosted turnover.

Although 2002 overall ended with a result similar to that estimated at the beginning of the year, there had been indications that perhaps an even better result might be in store. The year began extraordinarily well – thanks to the fact that excellent Christmas sales in 2001 had almost emptied retailers’ stocks. It was an excellent starting point for production and sales in early 2002. And it coincided with consumer eagerness to buy.

In the light of buoyant expectations, the Company manufactured large quantities of product throughout the summer in order to be able to satisfy consumer demand during the peak season.

But although the second half of 2002 was not actually a poor period, it did not bring the high sales levels that had seemed likely during the spring months. An economic slow-down in the LEGO Company’s main markets culminated in December. Growing consumer uncertainty reduced the size and value of Christmas gifts in the USA and Germany.

The result was that stocks of products held by both the Company and the retail trade were higher than corresponding stocks at the beginning of the year. The economic slowdown has persisted into 2003. With stocks high, it has already been necessary in the early part of 2003 to trim production by reducing the production workforce.

All of the LEGOLAND Parks enjoyed a good year in 2002. All parks reported good visitor figures and an improved economy.

With a range of good products and having already implemented efficiencies, the LEGO Company looks forward in 2003 to achieving a similar result to that of 2002.

It is a negative factor that the economic decline has continued into the early months of the year and that the USD remains weak – one third of the Company’s sales are in dollars.

The international political uncertainty makes it doubly difficult to forecast how the consumer will react – and thus how sales will develop.

Although Kjeld Kirk Kristiansen does not expect a high growth rate this year, it was evident at the press conference that he does believe that the coming years will see the LEGO Company grow by about 10% p.a. and that earnings will rise even more.

Further information:

Peter Kjelstrup,
Director of Communications,
tel. +45 79 50 61 19

Charlotte Simonsen,
tel. +45 79 50 65 79,
mobile +45 20 30 81 35