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Lego posts higher sales, upgrades full-year forecast

Lego posts higher sales, upgrades full-year forecast

Lego Group reported 5 percent revenue growth in the first half of the year Wednesday due to higher sales of classic products like its City, Technic and Star Wars lines. The toy maker also upgraded its full-year earnings forecast.
Lego, known for its colorful plastic building blocks, said pretax profit in the first six months rose 3 percent to 173 million kroner (euro23.3 million; US$32 million) from 168 million kroner in the same period in 2006.
The privately owned group does not release quarterly figures, and reports net profit only in its full-year report.
Sales increased to 2.96 billion kroner (euro397 million; US$542 million) from 2.82 billion kroner in the first half of 2006. Sales to the American market rose "especially well."
"The result demonstrates that our core products and values are the right ones, and at the same time we have enjoyed the benefit of a positive note on most of our markets," said Chief Executive Joergen Vig Knudstorp.
Lego's strong results came amid troubles for the world's largest toy maker Mattel Inc., which has recalled almost 19 million dolls, cars and action figures made in China because they contained lead paint or tiny magnets that could damage organs if swallowed by children.
Analysts said, however, that Lego's successes were more about its strong product lineup and new toys.
"They've done really well and diversified their product offerings," said independent toy consultant Chris Byrne. "They've managed to stay relevant" with products tied in with Star Wars and SpongeBob SquarePants.
"It's really a tribute to the power of a strong product, much more so than the recall."
Lego, which sells its products in more than 130 countries, said all markets recorded higher sales and noted that the new product line Aqua Raiders "proved itself a success."
Based on the results so far, Lego said it now expected its full-year pretax profit to reach 900 million kroner (euro121 million; US$165 million), up from a previous forecast of 550 million kroner (euro67 million; US$92 million).
"Traditionally, however, the bulk of sales occur during the second half-year, which means that success during the peak Christmas season is essential in order to meet the expected new target for 2007," Lego said.
Annual sales are now expected to equal the 2006 level, or around 7.8 billion kroner (euro1.01 billion; US$1.42 billion), the company said.
Lego has "been on a comeback for two years," said Sean McGowan, managing director at Wedbush Morgan Securities. "They been helped by refocusing on what the retail customer and consumers are looking for and better cost control."
Analysts also cited the strength of the strategic licensing deals Lego has made.
"They have hot licenses and really good products out on the marketplace," said Jim Silver. editor in chief of Toy Wishes, a trade publication.
The Lego Group is a family owned company, based in Billund, which employs about 4,500 people worldwide. Though the company is not publicly listed, it has published earning reports since 1997.
Founded in 1932, Lego's name was invented by combing the first two letters of the Danish words "Leg godt" (play well) without knowing then that the word in Latin means "I assemble."
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Associated Press Writer Mae Anderson in New York contributed to this report.
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On the Net:
http://www.lego.com


Updated : 2021-04-12 02:25 GMT+08:00