For the first time since 2004, The LEGO Group has reported annual sales and profit declines, with the Danish brickmaker’s global revenue falling by 8% to US$5.82 billion in 2017. Excluding the impact of foreign currency exchange, LEGO’s revenue for the full year declined by 7% compared to 2016.
The LEGO Group’s operating profit for fiscal 2017, meanwhile, was US$1.73 billion (a decline of 17%). The company’s net profit for the full year fell from US$1.56 billion in 2016 to US$1.29 billion.
According to the company, revenue declines were driven in part by the clean-up of inventories in the company’s value chain. The LEGO Group also reported that global consumer sales were flat throughout the year but trended upward in the final months of 2017, with sales growing in seven of the company’s 12 largest markets in December.
Classic ranges including LEGO City, LEGO DUPLO, LEGO Creator and LEGO Friends performed well, while the LEGO NINJAGO range benefitted from the release of The LEGO Ninjago Movie in September 2017. The company reported that LEGO Star Wars products, released in the second half of the year, also performed in line with expectations.
And while revenue in North America and Europe declined in 2017, sales in China saw double-digit growth. In an effort to capitalize on this uptick, The LEGO Group recently partnered with Chinese internet giant Tencent on a number of new interactive kid experiences that include a LEGO zone in Tencent’s online video streaming platform, as well as a localized version of the LEGO Boost building and coding set.
The company will also open an office in Dubai later this year as it continues to expand operations in the Middle East and Africa.
Moving forward, The LEGO Group says it will focus on stabilizing its business and investing in sustainable growth. In May 2017, the company achieved its goal of balancing 100% of its energy consumption from renewable sources. In fact, 2018 will see LEGO introduce elements made from entirely plant-based plastic (sourced from sugarcane).
In September 2017, LEGO announced a major company downsize that affected approximately 1,400 jobs, following a 5% revenue decline in the first half of 2017. The restructuring came in the wake of record-breaking sales for the company in 2016.