Looks Like Lego’s Still A Plastic Powerhouse

Looks Like Lego’s Still A Plastic Powerhouse
Daniel Johnston

3 months ago2 mins

What’s going on here?

Lego’s profit fell like a ton of, uh, colored cubes in the first half of the year, but the world’s biggest toymaker’s foundations are too strong to shake.

What does this mean?

Lego’s just the activity for cozy, laid-back evenings spent at home. So naturally, the Groundhog Day of nothingness that was the pandemic meant plastic bricks were strewn across floors all over the world. Even back then, the company’s CEO said that performance was unsustainable – and the first half of this year proved that to be right. Sales wrangled a 1% uptick versus the same time last year, but profit suffered its biggest fall in nearly two decades. Peel back the layers, though, and a lot of that loss was down to heavy investment in new factories and sustainability initiatives. Take stuff like that out of the equation, and operating profit was still almost double pre-pandemic levels.

Lego profit
Source: Lego

Why should I care?

For markets: Life in plastic isn't always fantastic.

The wider toy industry is going through a less-than-joyful period, shrinking this year because companies lost their spark. That meant Lego’s small growth still bumped up its market share, but that’s nothing new: the toymaker’s been outgrowing the industry for a while now. For comparison, US-listed rivals Hasbro and Mattel revealed double-digit percentage dips in sales over the first half of the year. That was before “Barbie” hit cinemas, mind you – but hey, Lego has plenty of its own build-your-own Dreamhouses out on the shelves.

The bigger picture: Do what you love.

Lego’s building two new factories, presumably made of bright, visible brickwork, and expanding four of its five existing ones. Sights are set on Asia – currently the firm’s smallest region for sales – for its growth plans, with China at the top of the list despite its current economic holdbacks. Lego has faith that the long-term opportunity there is unrivaled, with the country’s middle-class population expected to double within five years. That explains why the toymaker’s planning to open around 100 new stores there this year alone.

Lego sales by region
Source: Bloomberg


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