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Business News

Lego sales buck recession to hit all-time high

The house-building market maybe moribund but fantasy building by children is at an all-time high, the toy manufacturer Lego revealed yesterday.

Lego has positively thrived during the recession, as parents revert back to longer-lasting toys. Its parent company, Lego Group, has now posted a two-thirds rise in pre-tax profits to £99.5m, boosted by a 20 per cent rise in consumer sales in the UK. Total sales rose to £469m over the first half of 2009.

Retailers of board games and other traditional toys have also seen a renaissance in demand during the downturn. Last month, Hamleys cited Barbie and Transformers, as well as Lego, as toys it expects to do well this Christmas.

Part of the appeal of Lego during a recession is its "longevity", said Marko Ilincic, the managing director of Lego UK. "Parents spend lots of money on plastic imported toys, but they only do what it says on the tin. But children take Lego to pieces, build them up again and add it to other Lego, and that gives it longevity."

The first brick of the brand's story was placed by Ole Kirk Christiansen, a carpenter from Billund, Denmark, who started making wooden toys in his workshop in 1932 before naming the company Lego – coined from the Danish phrase "leg godt", which means "play well" – two years later. Today, Lego is sold in more than 130 countries, and more than 400 million children and adults will play with its bricks this year. The company makes about 17.5 billion bricks each year, which compares to fewer than two billion actual bricks manufactured in Britain.

Some of the darkest days for Lego came at the start of 2004, when it posted a record deficit of £144m.

Mr Ilincic said: "The company had lost its way back in 2004 – we nearly went bankrupt." He explained that it had expanded into a number of non-core areas, including watches, [theme] parks, and clothing. "We took our eye off the core business." While the company still owns a 30 per cent stake in Legoland Windsor, the park is now controlled by the private equity giant Blackstone.

But parents don't just buy Lego for their kids. Mr Ilincic says there are a host of website and forums for Lego adult enthusiasts around the globe. Partly with one eye on this market, Lego launched a range of new board games last month.