Financial results for first half of year show growth in sales and revenue
Posted by Huw,
Earlier today LEGO posted its financial results for the first half of this year. Sales and revenue have grown, while operating profit has remained the same.
Here;'s the full press release:
BILLUND, September 28, 2022: The LEGO Group today reported earnings for the six months ending June 30, 2022. Revenue for the period grew 17 percent to DKK 27.0 billion compared with the same period in 2021, driven by strong demand. Consumer sales grew 13 percent, significantly ahead of the toy industry, contributing to global market share growth.
- Revenue grew 17 percent to DKK 27.0 billion.
- Consumer sales grew 13 percent.
- Operating profit was stable at DKK 7.9 billion. Net profit was DKK 6.2 billion.
- Free cash flow was DKK 3.8 billion.
- Market share gains globally and in largest markets.
- The LEGO Foundation continues pledge to support families in need and children’s development through playful learning.
The LEGO Group CEO, Niels B. Christiansen said: “We got off to a strong start in 2022 and are very satisfied with our performance which landed above expectations after an exceptional 2021. Despite global uncertainties, we continued to deliver higher consumer sales and double-digit top line growth driven by demand for our strong portfolio and execution by our amazing team.
“Across the world, we celebrated our 90th anniversary and are grateful that after nearly a century LEGO play remains relevant and continues to inspire families and children.”
The strong revenue growth and free cash flow allowed the LEGO Group to significantly accelerate strategic initiatives and offset cost inflation on raw materials, energy and freight while keeping operating profit stable at DKK 7.9 billion.
In the first half of 2022, the LEGO Group focused on expanding manufacturing capacity and building healthier inventory levels while increasing productivity following an extended period of exceptional growth rates and maxed out capacity in 2021. Due to these accelerated investments, free cash flow was DKK 3.8 billion, compared to DKK 5.8 billion in the same period last year. Net profit stayed solid at DKK 6.2 billion matching the extraordinary result in the same period last year.
Christiansen said: “For the second half of 2022, we continue to see strong demand for our products. Longer-term we expect top line growth to normalise to more sustainable levels. We will also continue to reinvest in our business and accelerate initiatives such as product innovation, digitalisation, production capacity, our retail network and sustainability to maintain momentum and deliver sustainable growth in the long-term. These significant investments will position us well in the future to bring learning through play to more children around the world.”
Strong portfolio appeals to fans of all ages and interests
During the first six months of 2022, consumer sales grew in all market groups, with especially strong performances in the Americas, Western Europe and Asia Pacific. The growth was driven by the continued demand for the company’s extensive and diverse product portfolio. Top themes in the first half included LEGO Star Wars, LEGO Technic, LEGO Icons (formerly Creator Expert), LEGO City, LEGO Harry Potter and LEGO Friends.
This year’s portfolio is the largest on record and caters for builders of all skill levels and ages. It includes LEGO products that reflect a wide range of interests and hobbies our builders are passionate about from art and design and cars to music, sport and space exploration.
In April, the LEGO Group announced a long-term partnership with Epic Games which will see the two companies join forces to create fun, safe digital experiences for kids in the metaverse and inspired by the endless possibility of the LEGO brick.
Strategic growth initiatives drive reach, relevance and a digital future
The company expanded its global store network in the first six months, opening 66 new LEGO stores, 46 of which were in China. This takes the number of stores globally to 833. The company also strengthened e-commerce capabilities across its own and its partners’ online platforms.
In June, the LEGO Group officially opened a digital office in Copenhagen while growing the global digital team nearly 40 percent in the first six months of 2022. Over a three-year period, it is committed to triple the size to 1,800 colleagues globally while strengthening e-commerce, upgrading digital infrastructure and driving an enterprise-wide digital transformation.
The LEGO Group made progress against its ambition to make its packaging from sustainably sourced materials by the end of 2025. In the second half of 2022, it will begin to roll out paper-based packaging in LEGO boxes in Europe.
In June, the company announced plans to open its second carbon-neutral run factory in Virginia, United States, in addition to the factory announced in Vietnam late last year. Both sites’ energy requirements will be matched by energy from onsite renewable sources.
Creating impact for children and families
The LEGO Foundation, which receives 25 percent of the LEGO Group’s dividends, pledged more than DKK 1 billion in donations in the first half of 2022 to support families in need and children’s development. Some of the programmes funded included a global competition aimed at giving children the best start in life; support for neurodivergent children; and support for children and families impacted by the war in Ukraine.
Christiansen said: “We are fortunate that our strong financial performance allows us to make a positive contribution to society and invest in the company’s future so we can bring learning through play to children everywhere.”
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74 comments on this article
But… reading all the comments here over the past few months, I thought LEGO was doomed because they did not know how to do business…
so unfortunate they had to increase so many prices, especially when they're proven here to be greed driven decisions
What I read from this is the reason for the price increase was actually justified. Their revenue was up 4B DKK but their profit was basically the same.
@ALFIE22 said:
"so unfortunate they had to increase so many prices, especially when they're proven here to be greed driven decisions
"
The evidence does not support your interpretation.
@Glacier_Phoenix said:
"What I read from this is the reason for the price increase was actually justified. Their revenue was up 4B DKK but their profit was basically the same. "
So you want LEGO to cost more and increase prices?
I’m still glad to see LEGO is doing well. It’s brought be a lot of joy in life, and I hope more people get to experience that happiness in theirs.
Usually whenever I’m critical of the company’s choices, I want it to be from a place of admiration. I don’t think a failed theme or an odd license here and there is going to do them in. They seemed to bounce back from VIDIYO fine.
Almost 1 billion euros in net profits on the first quarter. But POOR LEGO JUST HAD to hike prices massively "to combat inflation".
"The strong revenue growth and free cash flow allowed the LEGO Group to significantly accelerate strategic initiatives and offset cost inflation on raw materials, energy and freight while keeping operating profit stable at DKK 7.9 billion."
This just goes to show the corporate simps that LEGO's massive price hikes had NOTHING to do with "offsetting rising costs due to inflation" but with maintaining net profits at all costs, while spitting in the faces of their customers.
If the strong revenue in the first quarter, PRIOR to the massive price hikes, allowed for this and still left them with almost 1 billion euros in net profits, that means that the price hikes were NOT actually needed.
@ALFIE22 said:
"so unfortunate they had to increase so many prices, especially when they're proven here to be greed driven decisions
"
I wonder if people would’ve been less upset if they only raised the prices on newer sets rather than ones already on the shelves. Wasn’t there an article breaking down the price hikes and showed that LEGO overall tries to keep them reasonable with current inflation? It wasn’t on Brickset, but I can’t seem to recall what website it was on.
@eiffel006 said:
"But… reading all the comments here over the past few months, I thought LEGO was doomed because they did not know how to do business… "
This is the report from the first half of 2022. The report from the second half or year-end financials released in March will be key...though suspect holiday season will "dilute" any obvious flags resulting from the price increases.
They keep raising prices. Of course they're continuing to 'grow'.
@Glacier_Phoenix said:
"What I read from this is the reason for the price increase was actually justified. Their revenue was up 4B DKK but their profit was basically the same. "
Look a little further. It was up 104 % yoy in 2021. That's typically 7 to 10 years of growth for a company of this size. They are not a public owned company and don't have shareholders to answer to. Only greed would compel them to keep profits "stable" after growth like that.
Amazed that neither LEGO Super Heroes nor LEGO Ninjago is one of their top themes.
Reminder: this is before the price raises, which happened in August.
These two figures seem important for some reason:
Consumer sales up 13%
... but revenue up 17%.
What do they mean by the following?
In June, the LEGO Group officially opened a digital office in Copenhagen while growing the global digital team nearly 40 percent in the first six months of 2022. Over a three-year period, it is committed to triple the size to 1,800 colleagues globally while strengthening e-commerce, upgrading digital infrastructure and driving an enterprise-wide digital transformation.
Look no one can say it's not at the bear minimum rude that lego went from "we need to up prices because of inflation and post-covid" them going on to brag '"WERE UP %17 REVENUE, AND 13% MORE SALES, BETTER THEN EVER WOW MILLIONS AND BILLIONS OF DOLLARS"
I agree the price increases are unfortunate. But to see it from another angle the high turnover makes more room for Lego to experiments in new sets and themes. And, in the end, that has to become a plus for us as Legofans. The release of new cool sets has never been better the last couple of years.
I dont agree with the hike, but it is what it is. As long as the pieces are still being produce and available through Pick a Brick/Bricks n Pieces; MOCs are the way the future for me.
The price increases of products that were already released is the thing that hurts them. Take that out of the mix and I think you’d find that a significant portion of consumer reaction that is as negative as it is to things regarding the company when it comes to perceiving them poorly on the corporate side…probably not so harsh.
Revenue and sales may have increased, but the chart shows reduced profits from last year. Meanwhile, expenses have also increased year-on-year. Not an especially rosy picture. Guess we'll just have to see if those investments pay off.
Lol the whining about price increases. There are alternatives to paying full price.
1. You can find every Lego set used at steep discount.
2. There are services where you pay a monthly fee for "renting" sets.
3. Download the free instructuons and build using existing pieces.
4 Copy-cats
5. Or just don't buy.
TLG can set their prices to whatever they think the market will bear. They don't need to justify anything to anyone. For me, I've stopped collecting Technic. Ya know what? I have found I don't miss it.
@winbrant said:
"
This is the report from the first half of 2022. The report from the second half or year-end financials released in March will be key...though suspect holiday season will "dilute" any obvious flags resulting from the price increases."
Don't forget the mass of purchases due to the foreknowledge of the price increases. I have spent more money on official Lego sets in 2022 than in 2019, 2020 and 2021 combined just because I accumulated a backlog of sets that I wanted to get for sure but was waiting on discounts for. The trend of long running big ticket items really skews the scales. AT-AT and Diagon Alley alone made up far more than the entirety of my 2020 purchases of new products.
@lippidp said:
"Lol the whining about price increases. There are alternatives to paying full price.
1. You can find every Lego set used at steep discount.
2. There are services where you pay a monthly fee for "renting" sets.
3. Download the free instructuons and build using existing pieces.
4 Copy-cats
5. Or just don't buy.
TLG can set their prices to whatever they think the market will bear. They don't need to justify anything to anyone. For me, I've stopped collecting Technic. Ya know what? I have found I don't miss it."
1.) Some sets don’t discount as heavily as others. This is especially true if they contain a desirable minifigure or part.
2.) What services? And is taking out a loan for lego really such a good idea?
3.) Even if I have the instructions, odds are I will still need to buy pieces in order to build it.
4.) Copy Cats are often of worse quality, use designs that are not theirs, or outright have missing pieces. Unless you mean alternatives to LEGO, but those might not have alternatives to sets I want. Mega Star Wars isn’t exactly a thing.
What are people expecting from a capitalist company? They raised revenue 4b DKK (the money they make selling the lego which is likely due to increased prices) but actually made less in profit. So they passed on the additional costs to produce their product to the customers. And did it very well since they made no extra money.
It’s not legos job to be cheaper and make less money because you want their product cheaper. It sucks it’s expensive, yes, but it’s completely unreasonable to expect them to do anything different.
For perspective 1DKK = $0.13
@TheEpicLuke said:
"Reminder: this is before the price raises, which happened in August. "
Several sets released in the first half already had unreasonable prices like Mandalorian Naboo Starfighter and Bobas Throne room.
Record breaking numbers and this company is squeezing more and more from its customers while effectively maintaining a monopoly in the toy industry. Insane greed.
@bananaworld said:
"
These two figures seem important for some reason:
Consumer sales up 13%
... but revenue up 17%.
"
And this is first half of the year BEFORE the price hikes. Lego is greedy
Seems some people forget...just because LEGO makes toys, it does not make them an NGO/non-profit organization. They are a business-for-profit and they do a good job.
Lego board of director: Looks like the AFOLs are still buying despite the 20% increase in price. Let’s increase 20% more and see if that works as well.
I for one has opted for Bricklink vs. Buying Lego sets for 2 years now. Let’s see if others do the same. Bricklink prices are much better and I get to focus more on MOC.
I'm glad that LEGO is investing in sustainability, the paper bags situation is still so stupid to me. Paper bags are a much better idea than plastic, yet they've now been delayed for a year. Here, LEGO says they won't be rolled out until the second half of 2022, but I still haven't seen evidence of them in any sets besides the Temple of Celebrations exclusive.
So why did they waste a ton of paper to print pamphlets advertising their arrival in a bunch of sets starting in June? Tens of thousands of sets must have those pamphlets in them when the company knows paper bags haven't been packed yet. That's extremely idiotic when you're trying to be sustainable.
I want LEGO to succeed financially because I want them to keep existing, so they can keep making things I enjoy. That’s why I celebrate every successful theme or product LEGO releases, even if it doesn’t appeal to me.
Running a business is complicated - I’m generally very anti-corporate, but I’ve learned that much from my employer’s otherwise uninteresting quarterly updates (especially these last five years). Growing profits and revenue isn’t just about greed, it also (1) enables investments in maintenance and new initiatives, whether that be new themes or new factories - and new production locations can help mitigate the volatility of supply chain issues, which can long-term help stabilize price increases and/or backordered products. Growth also (2) is the opposite of decline: mathematically, it’s very difficult to maintain exactly the status quo (no growth or decline), and if we all want LEGO to keep existing then growth is what we should hope for. :)
@jaredhinton said:
"What are people expecting from a capitalist company? They raised revenue 4b DKK (the money they make selling the lego which is likely due to increased prices) but actually made less in profit. So they passed on the additional costs to produce their product to the customers. And did it very well since they made no extra money. It’s not legos job to be cheaper and make less money because you want their product cheaper."
You are correct.
I'm finding that what bothered me the most with all the changes of past few months is the image they try to portray themselves as. They are working hard to be the "friendly neighbourhood lego-man", but they're not. The product is colourful and fun, yes, but the company itself is made of suits just like "boring" or tech companies that people are ok to critic. They are no different to FB with their reasoning for actions. It's all about the bottom line.
Since forever we've been told that every company's action is driven by the need to satisfy the endless hunger of "stock holders", yet here we are with a friendly private company doing the same. Their image is lost for me, I don't buy the genuinely of anything to say or do. Donation, transition to being green, smiling sales "Lego expert" on retail and other "we're your friends" gestures. So yeah, you're correct, they're just another capitalist company and I feel foolish to think otherwise all these years.
On the plus side, that made the decision of reducing the purchases quite easy for me, and I'm also a bit burnt from being over saturated with the amount of big AFOL oriented sets they released in the last 2 years.
@elangab said:
" @jaredhinton said:
"What are people expecting from a capitalist company? They raised revenue 4b DKK (the money they make selling the lego which is likely due to increased prices) but actually made less in profit. So they passed on the additional costs to produce their product to the customers. And did it very well since they made no extra money. It’s not legos job to be cheaper and make less money because you want their product cheaper."
You are correct.
I'm finding that what bothered me the most with all the changes of past few months is the image they try to portray themselves as. They are working hard to be the "friendly neighbourhood lego-man", but they're not. The product is colourful and fun, yes, but the company itself is made of suits just like "boring" or tech companies that people are ok to critic. They are no different to FB with their reasoning for actions. It's all about the bottom line.
Since forever we've been told that every company's action is driven by the need to satisfy the endless hunger of "stock holders", yet here we are with a friendly private company doing the same. Their image is lost for me, I don't buy the genuinely of anything to say or do. Donation, transition to being green, smiling sales "Lego expert" on retail and other "we're your friends" gestures. So yeah, you're correct, they're just another capitalist company and I feel foolish to think otherwise all these years.
On the plus side, that made the decision of reducing the purchases quite easy for me, and I'm also a bit burnt from being over saturated with the amount of big AFOL oriented sets they released in the last 2 years."
I am in near-total agreement with you both, but I wanna touch on a detail that, I think, better describes the issue we are seeing. In your complaints regarding Lego's corporate attitude, I think the word you guys are looking for is "consumerist" - not "capitalist."
Capitalism is the acquisition of capital (resources) through mutual agreement between a producer and consumer. It's the mechanism in which Lego produces a set, fans want to get that set, and so there is an exchange that gives Lego money and fans the set. To ensure this mechanism works, Lego has to produce good sets and price them so they can make profit but their fans will be satisified with the transaction. If they can keep this up, they can make money for a long time. This has been their working strategy with automatic binding bricks since their inception - and as we have seen from both the early 2000's and early 2010's, the market will react with consequences to both poor and great decisions that Lego makes towards their fans and consumers.
Consumerism, however, is an abuse of capitalism designed to maximize consumption of resources. The focus is no longer on maintaining a reasonable producer/consumer dynamic, but, rather, the producer abusing the relationship with the consumer so as to maximize resource acquisition. This is the mindset that seeks to "satisfy the endless hunger of 'stock holders'", market their eco-friendly stance without demonstrable results, put on a happy and friendly face for publicity's sake (while hand-waving its fans' complaints), raise the prices on set with padded comments on current events, etc. etc. etc. It is now no longer about maintaining those producer/consumer transactions in the toy market, it is now about chasing dollar bills where growth and gain seem present - regardless of how many consumers are burned in the process and how those efforts will hold up long-term.
I have no problem with Lego making money, they gotta pay their employees (as passionate as we fans are, we gotta remember there are people at Lego who are just trying to pay their bills same as we are) and I'd be quite happy if Lego could take my money and use it to make cooler sets. But now we are at the point where, as a consumer of Lego, I am no longer feeling that the transaction is favorable, but rather, abusive.
@GBP_Chris said:
" I am in near-total agreement with you both, but I wanna touch on a detail that, I think, better describes the issue we are seeing. In your complaints regarding Lego's corporate attitude, I think the word you guys are looking for is "consumerist" - not "capitalist."
....
I have no problem with Lego making money, they gotta pay their employees (as passionate as we fans are, we gotta remember there are people at Lego who are just trying to pay their bills same as we are) and I'd be quite happy if Lego could take my money and use it to make cooler sets. But now we are at the point where, as a consumer of Lego, I am no longer feeling that the transaction is favorable, but rather, abusive."
Interesting comment, and I agree with what you've said. I don't want them to fail, it's not a crusade, but I wonder what's going on behind closed doors. Are there things we're not aware of that will get reveled soon, or it's just as simple as success went to their heads after 2.5 years of COVID and 80s kids hitting their midlife crisis buying anything nostalgic in lieu of Harley Davidsons. I'm curious if they're entering their new "dark era". I don't think it would be so bad, as staying at the top for a long time has its negative sides as well.
@lippidp said:
"Lol the whining about price increases. There are alternatives to paying full price.
1. You can find every Lego set used at steep discount.
2. There are services where you pay a monthly fee for "renting" sets.
3. Download the free instructuons and build using existing pieces.
4 Copy-cats
5. Or just don't buy.
TLG can set their prices to whatever they think the market will bear. They don't need to justify anything to anyone. For me, I've stopped collecting Technic. Ya know what? I have found I don't miss it."
I had to resort to the same strategy. The general wisdom is: if you disagree with what Lego is doing, just stop buying it. I still buy a few sets but this has pretty much stopped since the price hike and I'll try to limit my buys to just a few sets(4-6) per year (probably cut my usual consumption by 3-4).
I don't mind rising prices - (IMHO) you just cannot rise existing products - all product must be raised by the same percentage - the percentage must be commensurate with the observed financial data (i.e. 20% rise vs 8% inflation is a big no-no). But seriously what bugs me the most is declining quality: brittle parts, not fitting as well as before, colour discrepancies, stickers colours off. Normally you pay a premium price for a premium product but nowadays Lego is less and less a premium product...
Happy for them they are doing well because I will continue to buy a set here and there but they won't get more money from me - I'll get less Lego from them (less happiness per dollar). If enough people do that; instead of rising prices to increase profits, they will cut in the unnecessary expenses.
@elangab said:
"
Interesting comment, and I agree with what you've said. I don't want them to fail, it's not a crusade, but I wonder what's going on behind closed doors. Are there things we're not aware of that will get reveled soon, or it's just as simple as success went to their heads after 2.5 years of COVID and 80s kids hitting their midlife crisis buying anything nostalgic in lieu of Harley Davidsons. I'm curious if they're entering their new "dark era". I don't think it would be so bad, as staying at the top for a long time has its negative sides as well.
"
If Lego did fail, it'd certainly be a dismal day - I've enjoyed this hobby for as long as I can remember and I have no doubt that brand loyalty is what's kept me from throwing my hands in total defeat. So I have no qualms about wanting Lego to succeed and for all of us to be able to enjoy the hobby again.
Sadly, I do think the company is entering a rerun of their late-90's panic, where they've lost track of what they're good at, who their customers actually are, and why throwing money at every buzz-word business venture that's popular now is not a good long-term plan. I see so many parallels between their digital obsession then with their original games department and electronics projects and their digital panic now with bad apps and throwing money at Epic, for example - and I am sure we could all list many more 90's/20's parallels if we all sat down and thought about it. But yes, I too wonder what's really going on, and howw much their claims of success have clouded their judgment.
When I see these kind of reports, from any type of business, I always wonder where it will end. Corporations are naturally profit-driven, that is understandable, but this desire to always GROW is mind-boggling to me. It's basically looked upon as a failure to _only_ generate the same amount of PROFIT as last time around. No one ever seem to stop and think about what the natural limit is. You can not have more customers than there are people on the planet, to simplify the concept. Somewhere there is a limit. But still it would be deemed a failure when they reach that limit as it would result in less growth that year.
I whish more businesses would see it as a win to generate profit at all. If they do, that means they delivered profit in the form of salary to all their employees and subcontractors, provided products to their customers, and still grew the money pile after all their expenses where paid. As long as the pile doesn't get smaller, it's a successful business, isn't it? The drive to not only grow the pile, but to grow it FASTER than last year, every year, will eventually end badly. Question is how far away that is for any given corporation.
But I'm happy TLG seem to be going well, for the short term that is only positive. But I whish they slow down that acceleration a bit, and spend more of that cash on improving the quality of their products rather than expanding further. Quality certainly have dropped, presumably as a result of this rapid growth, from what I have experienced lately. LEGO have historically been top-quality stuff, not just-about-what-we-can-get-away-with-quality stuff - which seem to be the new standard.
@Glacier_Phoenix said:
"What I read from this is the reason for the price increase was actually justified. Their revenue was up 4B DKK but their profit was basically the same. "
But the price increase was put into effect AFTER the first half of 2022. So, basically, LEGO had more revenue because of increased sales, but they also had more expenses in order to meet that increase in demand. Let's not forget that LEGO also did announce the construction of two new plants, hence why expenses would start to increase.
In short, these results do not justify the price increase that has taken effect AFTER these results.
@GBP_Chris said:
" @elangab said:
"
Interesting comment, and I agree with what you've said. I don't want them to fail, it's not a crusade, but I wonder what's going on behind closed doors. Are there things we're not aware of that will get reveled soon, or it's just as simple as success went to their heads after 2.5 years of COVID and 80s kids hitting their midlife crisis buying anything nostalgic in lieu of Harley Davidsons. I'm curious if they're entering their new "dark era". I don't think it would be so bad, as staying at the top for a long time has its negative sides as well.
"
If Lego did fail, it'd certainly be a dismal day - I've enjoyed this hobby for as long as I can remember and I have no doubt that brand loyalty is what's kept me from throwing my hands in total defeat. So I have no qualms about wanting Lego to succeed and for all of us to be able to enjoy the hobby again.
Sadly, I do think the company is entering a rerun of their late-90's panic, where they've lost track of what they're good at, who their customers actually are, and why throwing money at every buzz-word business venture that's popular now is not a good long-term plan. I see so many parallels between their digital obsession then with their original games department and electronics projects and their digital panic now with bad apps and throwing money at Epic, for example - and I am sure we could all list many more 90's/20's parallels if we all sat down and thought about it. But yes, I too wonder what's really going on, and howw much their claims of success have clouded their judgment."
It's funny you mention the original games - today in 1997 Lego came out with the first LEGO Island game. It was also around this time they posted their first deficit, which made international news. They've come along way since then, reaching heights unthinkable in the early 2000's, but when you're at the top, there is only one way to go from there - down.
So to sum up, Lego raised prices or reduced piece count on new sets over the last year, increasing prices again across the board a month ago, but people keep buying. It’s not hard to predict that Lego will just keep increasing prices or reducing piece count.
I can’t count the number of times I’ve heard parents in stores tell their kids that Lego sets are too expensive and to pick another toy to buy.
Looks like their revenue is up, their expenses way up but profits down.
That's probably why they raised prices on certain items.
As a CPA as well as a AFOL, I would like to point out that even in international accounting, capital investments such as new factories in the US and Vietnam are not reflected in profit, they are capitalized as assets. In the US, a new factory building itself with be expensed over 39 years (although the equipment inside will be taken a lot faster). The profit doesn’t all go into the owners pockets but pays for capital improvements and debt Reduction (although I don’t know if the Lego group has any debt since I didn’t read the report).
@MutoidMan said:
"Amazed that neither LEGO Super Heroes nor LEGO Ninjago is one of their top themes."
Actually, now that you mention it neither of those surprise me. For Super Heroes they haven't made many DC sets this year and interest in Marvel within pop-culture has died a lot since Endgame.
Even as a Ninjago fan, I still haven't bought any Ninjago sets this year. The winter wave were very juniorized and awkward for my tastes (and if Brickset, YouTube, and Reddit are anything to go by, most other adult Ninjago fans agree,) and while the summer Crystalized wave is more appealing it still hasn't convinced me and probably wasn't included in these calculations.
This again...
This is overwhelming simple. If people want LEGO to lower their prices, they need to stop buying so much from BrickLink.
The proof is in the best selling themes. Star Wars and Harry Potter have always had high collector value. Resellers can generally recover their expenses on those sets by selling the minifigures alone. City has always been popular, especially among people who build modular cities. Friends and Technic have historically been considered good value for those that swear by PPP.
This, coupled with the myriad of initiatives LEGO is working on, pretty much explains it all as far as I'm concerned.
@eiffel006:
Reading the comments here, you'd think they were building Scrooge McDuck money bins all over Billund.
@ALFIE22:
What greed? Operating profit and net profit stayed flat, while revenue and sales grew. They also give away 1/4 of their profits for charitable purposes. Did we read the same article?
@Nagamon:
Oh, we'd all love for it to cost less, but a realistic outlook is that, like _everything_ you can buy that isn't a loss-leader like Costco's cooked chickens, costs have to go up eventually or profit margins recede until the business folds. Is that what we'd prefer?
@djcbs:
If you read the article posted here a few weeks ago, the biggest hikes were on new D2C sets that would be in production long enough that their profit margin on the tail end would be eaten up by inflation that's a few times higher than what they would have factored in when establishing the retail prices. 2-3 years down the road, raise this issue again and see how their revenue and profit margins compare against this report. My guess is you won't see evidence that they were buying out entire Ferrari dealerships for a weekend lark.
@PixelTheDragon:
https://bricknerd.com/home/greed-or-inflation-an-economic-analysis-of-lego-price-increases-7-26-22
It was linked from the Brickset article showing the full list of US price bumps, so commented on as if it was posted here.
@Smith19:
"Operating profit was stable at DKK 7.9 billion."
2021 profits may have been up, but that was following a surge in pandemic buyers, and before inflation kicked into overdrive. Profit _margin_ this year is actually down from 2021, when you consider that sales actually grew 13% and revenue grew 17% but they didn't actually see a similar growth in profit. That means all those extra sales went into paying higher expenses, either of the voluntary/charitable type (making facemasks for medical use during the pandemic, or producing braille bricks that they only give away for free), or the involuntary type (higher transportation/energy costs, higher wages, etc.).
@Montyh7:
Telecommuting, aka "work-from-home", where you work via computer from basically any location in the world. Some jobs can be done this way (i.e. anything that can be done strictly via computer), and others do not (physical manufacturing/warehousing, most of the service industry, emergency services, transportation, etc.). Lots of people are recruited from foreign nations, and one of the big drawbacks is that you have to relocate to Billund or the surrounding area. Not that it's a terrible place to live, but prospective employees might have families that can't be uprooted, or simply not be willing to give up living where they're at.
@Legogenius22:
I can. 17% higher revenue, 13% higher sales, 0.00% higher profit. Where did all the extra money go? Is that a short-term thing, or will operating expenses continue to outpace revenue to the point that they start posting numbers that show they made more money, sold more sets, and made _less_ profit? How many years will it take before it's more money, more sold, zero profit?
@GoldenNinja3000:
Use up the bags they already have on hand, or have contracted to buy, before they switch to paper. Trial the paper to make sure it works as intended, and doesn't need to be revised first. Warn the consumer that paper is coming, so they aren't freaked out about it when it does eventually happen. In the US, it was announced that Uncle Ben's products would be rebranded Ben's Original several months before the change actually took effect. I'd even been told here that the new packaging was available in Germany at least a week before the first time I saw it on local shelves.
@Balthazar_Brannigan:
Growth is also a bare minimum requirement to keep pace with inflation. If the cost of living goes up 2% every year, the cost of business does too.
@HOBBES:
They announced that they've fixed the brittle plastic problem. Either you believe them, or you don't. It's a problem that took a few years to show up, as the parts aren't brittle right off the factory line, but rather a few years later. Only time will tell if the fix actually worked, but it takes a pretty big pair to announce that you've fixed it if you aren't really sure. I'm inclined towards cautious optimism on this, and I'll be limiting my purchases of brown and dark-red to direct sales, or parts that I know are too old to have been impacted by this problem
@GBP_Chris:
The critical difference is that in the late 90's/early 00's, the entire company was run in that manner, and profits went through the floor for two years. Right now the company seems to be able to shrug off a few misses because they're limiting this to a few select themes, and the majority of their catalog can Bionicle the company along in the meantime.
@RTS013:
This is tied up in the question of how many people the world can support. World population is growing, and there are large parts of the world that they aren't serving at all, or at a bare minimum. A much longer question is how many individual bricks can be contained on this planet before they have to start recycling old ones to make room for new ones. These are both questions that can only be answered at this time by shutting down the company for good. If everyone does that, it will lead to the same abrupt decline as future generations face if nobody does.
@Daz_Hoo:
It's costs a surprisingly small amount of money to announce that you're going to build a new plant. It's when the actual construction starts that you'll spend a truckload of money, and I hadn't heard that ground was broken on either of these facilities.
@PurpleDave said:
" @GBP_Chris:
The critical difference is that in the late 90's/early 00's, the entire company was run in that manner, and profits went through the floor for two years. Right now the company seems to be able to shrug off a few misses because they're limiting this to a few select themes, and the majority of their catalog can Bionicle the company along in the meantime."
That is true, however, the beginning of that era is marked by Lego's initial fears of the electronics market rendering them obsolete - amongst other concerns as they approached the new millenium. The strategies they implemented began far before their profits sank as they lost sight of their target audience and made strange decisions. The late 90's/early 00's became a critical phase for the company as they reaped the "rewards" of what they sowed towards the start of the decade.
Is Lego at that critical phase yet? No, we have the math in the report above to say so. Do I think there are strong parallels between Lego's early 90's concerns/strategies and Lego's current 20's concerns/strategies? Yes, I think there are some interesting correlations, and I am curious as to how much longer before we either see a divergence from the pattern, or even more stark parallels.
@Smith19:
I looked up the 2021 numbers, and they did not see 104% growth in profit. Over 2020, they had a 27% increase in revenue, a 22% increase in sales, and a 25.6% increase in profits. They've also announced recently that they expect growth to "normalize" back to single-digits in the near future. I'm curious where you got that figure.
@GBP_Chris:
How's that old phrase go? "The definition of insanity is releasing one app-based theme after another, with a ton of new molds, when all the previous ones have flopped?" I mean, there are clearly some lessons that haven't been learned yet, but at least they're limiting the size of the sandbox these days. It's like people who take a fixed amount of cash to gamble at a casino. Restrict the amount you're putting on the table to a managable amount, and you can afford to lose every single time. And maybe a few times you don't.
@PurpleDave said:
" @GBP_Chris:
How's that old phrase go? "The definition of insanity is releasing one app-based theme after another, with a ton of new molds, when all the previous ones have flopped?" I mean, there are clearly some lessons that haven't been learned yet, but at least they're limiting the size of the sandbox these days. It's like people who take a fixed amount of cash to gamble at a casino. Restrict the amount you're putting on the table to a managable amount, and you can afford to lose every single time. And maybe a few times you don't."
Hidden Side was a cry for help from the ghost of Ole Kirk Christiansen, but we misinterpreted it and though the ghost hunters were the heroes.
In all seriousness, I think that's a fitting analogy. Here's hoping the sandbox stays limited enough.
@GBP_Chris:
Have you watched the animated special? The creepy looking Harbinger was actually here to save us from total destruction.
Surprising to hear that LEGO has managed to maintain the incredible growth they experienced over the past couple years - is this really sustainable? Regardless, that brick-built construction crane pictured on the graphic is adorable, and a really clever idea to boot.
@Unikittius:
They don't believe so:
https://www.lego.com/en-us/aboutus/news/2022/march/2021-annual-results
"In 2022, the LEGO Group expects growth rates to normalize to long-term sustainable single-digit growth."
I mean, it hasn't yet, but it will eventually. It's good that they're anticipating this happening, so the company isn't caught off guard resulting in a huge overstock of sets they can't sell.
I hadn't really looked at the models in the chart images, but the crane-crane, bonsai-flamingo, fish-balloon, and lawn-grower all show a weird sort of creativity, while still being pretty solidly designed models.
@PurpleDave
You think it's only WFM? Not that it includes moving more towards apps for sets and themes?
@Montyh7:
I mean, I can't rule it out, but the wordage sounds more like it's geared towards stuff like marketing and online shopping. You know, things that people in Billund do while sitting at a desk with a computer in front of them. I would hope the takeaway was not that, "App-based themes have failed miserably, so clearly we need to double-down and create a dedicated team to develop them more intensely." Talk about banging one's head on a wall and expecting a different result...
Remember TLG jacked up the prices at the beginning of the year too (at least here in Europe). There are now a couple sets that even got twice inflated like the Technic Tow Truck, Infinity Gauntlet, etc. And most sets that got released prior to the summer price bump also came out with higher prices than was communicated to retailers e.g. Lion Knight's Castle +50€, Loop Coaster +40€, etc.
Economic illiteracy is over 9000 in this comment section. I also had an emotional reaction to lego business strategies. But then I searched for factual answers and not stayed in my emotions.
If a sea monster grows exponentially, the fish it increasingly feeds upon can’t match that growth in numbers.
It’s a very basic analogy but we ignore long term sustainability at our peril on every level.
The first half of 22 was Pre-price increase, which took place in August. Of course people would have scrambled to buy more before the increase took place. It's also easy to hide profits by increasing expenses (paying executives more, investing in new USA plant etc.) I still think the increase is greed and that revenue will drop in the second half.
@norco_kid said:
"The first half of 22 was Pre-price increase, which took place in August. Of course people would have scrambled to buy more before the increase took place. It's also easy to hide profits by increasing expenses (paying executives more, investing in new USA plant etc.) I still think the increase is greed and that revenue will drop in the second half."
Paying more to execs or building new plant is hardly a way to 'hide profits'- you don't hide the money, you pay with it. It's also quite naive to think that the second half of the year might bring lower sales than the first half. It's holiday season in the second part of the year, people will buy more toys.
this confirms my suspicions that the Marvel & DC license have become worthless
@eiffel006 said:
"But… reading all the comments here over the past few months, I thought LEGO was doomed because they did not know how to do business… "
SOmething can sell well, even if its not good - Look at Pokemon Sw/Sh games.
It doesn't matter if prices go up or stay the same or if profits go up or stay the same. I've bought significantly less this year than last year and I will assume next year will be less than this year. Just how it goes. This increase in prices only helps me justify spending less. Oh well.
LEGO knows what they are doing. And if they don't, well then I guess we sit on our bricks.
Hello everybody! Did you know that if you replaced your morning cup of coffee with a cup full of Lego that you would have 87% more joy in your life? Cheers!
The two points that interest me here. 1. What will their 2nd half of 2022 look like. 2. Their free cash flow is way down.
This comment section proves that just because you have an opinion, doesn't mean it's worth saying if you have no understanding of what you are talking about. This report directly proves that the price hikes were justified because their revenue grew by 17%, but their profit didn't increase at all. That means that LEGO had 17% higher costs. Since most price increases were less than 17% and many sets didn't even receive price increases, this means LEGO is absorbing some of these costs, while we harass them for being greedy. Some alternative options for keeping costs low are to pay employees less, spend less on sustainability, and behave unethically, so I'm glad they aren't taking those approaches. Inflation sucks, and because of the price increases I will probably be able to buy less LEGO, especially as a university student who's strapped for cash, but I don't think it's fair to blame LEGO.
@kkoster79:
It wouldn't taste or smell like coffee, so I'd expect it to be quite a bit north of 87%.
@Simbabwe said:
"This report directly proves that the price hikes were justified because their revenue grew by 17%, but their profit didn't increase at all. That means that LEGO had 17% higher costs. Since most price increases were less than 17% and many sets didn't even receive price increases, this means LEGO is absorbing some of these costs, while we harass them for being greedy"
Their net profit for H1 was DKK 6.2 billion. It's not like they went down to 1 billion, and as a private company 6.2 billion in profit is beyond amazing.
Let's put Lego aside, how much is enough for a private company to profit every 6 months? (Spoiler - there's no such thing as "enough"). That's the greed, and it's not just TLG. I don't like it, but it's understandable as that's human nature - to always want more and never be happy with what you have (and to be fair, same goes to us as buyers).
@thor96 said:
" @norco_kid said:
"The first half of 22 was Pre-price increase, which took place in August. Of course people would have scrambled to buy more before the increase took place. It's also easy to hide profits by increasing expenses (paying executives more, investing in new USA plant etc.) I still think the increase is greed and that revenue will drop in the second half."
Paying more to execs or building new plant is hardly a way to 'hide profits'- you don't hide the money, you pay with it. It's also quite naive to think that the second half of the year might bring lower sales than the first half. It's holiday season in the second part of the year, people will buy more toys."
What I meant was that sales will drop vs the second half of last year. I do believe that the price increases will yeild lower overall sales, but the Q1/Q2 numbers don't show it since the full price increases only took place in Q3.
@elangab:
It depends on what you want to do with the money afterwards. The LEGO Group cleaves off 25% to put into charitable endeavors, and I suspect many (if not all) of the Christiansen family members have their own philanthropical interests. And yeah, Kjeld Kirk collects Ferraris.
@PurpleDave said:
" @kkoster79:
It wouldn't taste or smell like coffee, so I'd expect it to be quite a bit north of 87%."
Ok maybe it will bring 110% more joy than coffee!
833 stores and tons in China. Hello @lego. Can we get at least one store in the Caribbean?? Puerto Rico could be a good start!!!
@GoldenNinja3000 said:
"I'm glad that LEGO is investing in sustainability, the paper bags situation is still so stupid to me. Paper bags are a much better idea than plastic, yet they've now been delayed for a year. Here, LEGO says they won't be rolled out until the second half of 2022, but I still haven't seen evidence of them in any sets besides the Temple of Celebrations exclusive.
So why did they waste a ton of paper to print pamphlets advertising their arrival in a bunch of sets starting in June? Tens of thousands of sets must have those pamphlets in them when the company knows paper bags haven't been packed yet. That's extremely idiotic when you're trying to be sustainable. "
“ Virtue signalling is the expression of a moral viewpoint with the intent of communicating good character.”
@kkoster79 said:
"833 stores and tons in China. Hello @lego. Can we get at least one store in the Caribbean?? Puerto Rico could be a good start!!!"
Not to be too harsh in light of this week's events, but will LEGO be willing to rebuild Caribbean stores and replace lost stock every 2 years or so due to hurricanes? But it might be fun for Floridian AFOL's to find LEGO bricks washing up on the beaches from time to time...
And nothing but good wishes to all affected by the recent storms, hope you are all safe and recovering well.
@PixelTheDragon said:
" @ALFIE22 said:
"so unfortunate they had to increase so many prices, especially when they're proven here to be greed driven decisions
"
I wonder if people would’ve been less upset if they only raised the prices on newer sets rather than ones already on the shelves. Wasn’t there an article breaking down the price hikes and showed that LEGO overall tries to keep them reasonable with current inflation? It wasn’t on Brickset, but I can’t seem to recall what website it was on. "
Yes, there was. https://bricknerd.com/home/greed-or-inflation-an-economic-analysis-of-lego-price-increases-7-26-22