‘Everything is awesome’ as sales reach record high at Lego

Lego said full-year revenue advanced 13 per cent, outpacing the building-block maker’s competitors, helped by new toys based on “The Lego Movie.”

Sales rose to a record 28.6 billion kroner ($4.4 billion) in 2014, with double-digit growth in all regions, the Billund, Denmark-based closely held company said Wednesday.

Net income rose 15 per cent to 7 billion kroner. The toymaker's sales have increased every year for the past decade as chief executive officer Joergen Vig Knudstorp focused on the company's main Lego brick products and sold theme parks.

Lego gets about 60 per cent of sales each year from new collections, which have included sets based on the film that came out in early 2014. That has helped fuel growth as traditional toymakers compete with video games and electronic toys for children’s interest. “This is another record-breaking year, the best year ever for the Lego group,” Knudstorp told reporters at its headquarters, where he broke into “Everything is Awesome,” an Oscar-nominated song from the movie, while doing some dance steps.

Lego is expanding in Asia to tap emerging markets. A factory it’s building in Jiaxing, China will start running this year and become fully operational in 2017. Production in China will supply both the country and the Asia region, which contributes about 10 per cent of revenue, Knudstorp said in October.

Middle class

"I am confident that we can continue to grow because the global middle class is growing," though the pace of sales will probably "come down somewhat," the executive said in a Bloomberg TV interview.

“We can still continue with very healthy growth rates, but we are a company that is only growing organically. We never really make acquisitions because we want to stay very true to the Lego brick.”

Chief financial officer John Goodwin said Lego expects "satisfactory" results in 2015 as it grows "moderately ahead" of the market, which the company forecasts will have low-single-digit percentage growth in coming years.

Lego's operating margin expanded to 33.9 per cent last year from 33 per cent in 2013. Commodity Extrusion "That is an extraordinarily high profit margin for a business that essentially extrudes commoditised colored plastic into different shaped bricks," Louise Cooper, an analyst at CooperCity, wrote in a note. "There must be investment bankers licking their lips if Lego was ever to float."

Lego, whose name is derived from the Danish words for "play well," is controlled by the family of carpenter Ole Kirk Kristiansen, who founded the business in 1932. The company produced more than 60 billion pieces in 2014, which would reach more than 24 times around the world laid end-to-end.

Bloomberg