Marked improvement in half year result in uncertain market

Lego News - August 2008

In the first half of 2008 the LEGO Group increased its sales by 20% above the corresponding figure for the same period of 2007. Profit before tax for the first six months of 2008 was DKK 564m compared with DKK 212m for the same period the previous year.

Good start for LEGO Indiana Jones

Net turnover for the first half of 2008 was DKK 3,555m compared with DKK 2,959m during the first half of 2007.

Classic product lines LEGO City and LEGO Star Wars™ continue to do better than expected. In addition, the new licensed line LEGO Indiana Jones has sold extremely well – especially on the North American market.

The increase in sales was recorded especially on the North American and Northern European markets but all markets returned better figures than for the first half of 2007.

The LEGO Group´s sales direct to the consumer through its own branded stores, mail order and the Internet also developed in a positive direction.

Difficult market

These results have been achieved in spite of the fact that the international stagnation forecast at the beginning of the year is now a reality. The total toy market has not grown during the period – while the LEGO Group has achieved a double digit growth rate in sales to consumers on many markets and increased its market share on all markets.

Satisfactory result

The result before tax for the first six months was DKK 564m compared with DKK 212m the year before. The improved result has been achieved despite the negative effect of exchange rate fluctuations and other external factors such as rising oil prices. The reason for the improvement is the significant increase in sales plus tight control of costs during the period.

At the end of the first half year, the Group’s equity was DKK 1,049m compared with DKK 853m at the end of the corresponding period in 2007. Cash flow from operations was DKK 541m compared with DKK 208m during the first half of 2007.

Raised expectations for annual result

In view of the results obtained in the first half year and the positive momentum currently enjoyed by LEGO products, the overall sales result for the year is now expected to be in the region of DKK 9 billion, with the overall result before tax in the region of DKK 1.5 billion.

Jørgen Vig Knudstorp, LEGO Group CEO:

“The result demonstrates once again the great strength of our classic product lines and the importance of combining these with new strong licences. As the bulk of toy sales are concentrated in the closing months of the year, there is still a substantial element of doubt about the overall result for the year as a whole. Particularly in view of the continued negative economic development – which looks like gaining ground. But based on the powerful momentum we are enjoying at present and our ability to keep costs under control, we are optimistic about the prospects for the rest of the year.”