Lego blocks out recession to boost sales

The house-building market may be moribund but fantasy building by children is at an all-time high, the toy manufacturer Lego says.

Lego has thrived during the recession, as parents revert to longer-lasting toys. Its parent company, Lego Group, has posted a two-thirds rise in pre-tax profits to £99.5 million ($242.7 million), boosted by a 20 per cent rise in consumer sales in Britain. Total sales rose to £469 million over the first half of 2009.

Retailers of board games and other traditional toys have also seen a renaissance. 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 in a recession is its "longevity", says Marko Ilincic, 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 - 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 a year.

Some of the darkest days came in 2004 with a £144 million deficit.

Ilincic said: "The company had lost its way back in 2004 - we nearly went bankrupt."

He said it had expanded into several 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.

Ilincic says there are also websites and forums for adult Lego enthusiasts. With an eye on this market, Lego began a range of new board games last month.

- INDEPENDENT