Lego, big user of ABS, reports higher 2012 sales, earnings

21 February 2013 21:24  [Source: ICIS news]

HOUSTON (ICIS)--Lego, the European toy maker whose iconic building blocks are made from acrylonitrile-butadiene styrene (ABS), reported on Thursday better-than-expected sales and earnings.

The Danish toy maker said its net profit rose almost 35% to Danish kroner (DKr) 5.61bn ($999.1m, €749.3) from DKr4.16bn a year ago. Sales for the full year rose to DKr23.41bn kroner ($4.17bn), putting Lego slightly in front of previous No. 2 toymaker Hasbro, which recently reported 2012 sales of $4.09bn. Mattel, the No. 1 toy company in the world, posted sales of $6.42bn in 2012.

Lego has tripled its revenue since 2007. Its US sales rose 26% in 2012.

Lego’s success comes amid a general downturn in the worldwide toy market. According to market research firm NPD, toy sales in the US slipped slightly in 2012 to $16.5bn, compared with $16.6bn the year before. But the building-block sector grew by an estimated 20%.

Lego’s double-digit growth was pushed by two of its best-selling product lines, Lego City and Lego Star Wars. Lego Friends, a new product line launched in 2011, delivered better-than-expected results and became the toy company’s fourth-best product line. The company said that even though it doubled production of Lego Friends in 2012, it was not able to meet demand.  

“We are very satisfied with the strong growth in Asia, especially driven by the appeal of Lego Ninjago, Lego Friends and Lego City," said Mads Nipper, the company’s chief marketing officer. “While Asia is a relatively small market for the Lego Group, during the coming years we anticipate that it will become a new engine of growth.”

Lego said it expects sales to continue to grow in 2013, but not as sharply as the company saw in 2012.

To meet increased demand, Lego announced in September that it will expand its factory in the Czech Republic. It also will build a new facility in Hungary near its Nyiregyhaza facility and open a new Asia office in Singapore. The company is also launching a new Legends of Chima line in 2013 – a play theme that takes place in a fantasy world populated by mythological animal tribes.

Legos are made from ABS, which most recently was priced in Europe from €2,195-2,390/tonne.

According to ICIS’s most recent pricing report, the majority of European ABS February contract price negotiations look likely to settle at a rollover, buyers and sellers said. 

($1 = DKr5.62; $1 = €0.75)

Reporting by Mark Yost

Author: ICIS staff

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