2021 was record year for Lego, 2022 looks ominous

Last year, Lego built itself records in both turnover and profit, but the party is coming to an end. The Danish toy manufacturer fears the situation in Russia, but stresses that a slower growth would still be a good achievement.

Production nearby pays off

2021 was a record year for Lego , with a record turnover of 55.3 billion Danish kroner (7.4 billion euros). In all important countries, the family business outperformed the rest of the toy market and sales grew by 27 % as consumers visited the physical stores more often again. The opening of new stores in China in particular gave a significant boost: Lego opened 165 new stores last year, most of them in China. In total, the toy brand now has 832 stores worldwide.

Net profit amounted to 1.79 billion euros, again considerably higher than the 1.32 billion euros from a year earlier. Even though the peak of the corona pandemic had passed, it was still a record profit for Lego. The Danish brand managed to avoid rising freight rates and logistical problems in part because it has always had a strategy of producing close to core markets in five different factories.

Expected slowdown

Still, it is impossible to keep on growing like this, the maker of building blocks realises. Growth over the past two years has been “extraordinary,” a spokesman told Business Times, and will fall back to a single-digit sales increase of around 5 % this year. That is still good compared to the rest of the sector and it is also more sustainable in the long term, Lego reassures.

The brand says it will also face some damage from its withdrawal from the Russian market: Lego has halted deliveries to 81 Russian franchise stores following the war in Ukraine. The company has about eighty employees in Russia. It is not yet possible to predict what the exact impact will be, according to the Danes. The brand is closely monitoring the situation.