The LEGO Group has reported earnings for the full year 2023. The company grew revenue two percent to DKK 65.9 billion despite a difficult external operating environment and significantly outpaced the toy market, growing market share. Operating profit was a solid DKK 17.1 billion as the company accelerated spending on short- and long-term strategic initiatives.
CEO Niels B. Christiansen said: “We are pleased with our performance given that 2023 was the most negative toy market in more than 15 years. We continued to grow on top of three years of extraordinary growth and saw strong momentum in the final quarter of 2023. We significantly outpaced the market, growing share and proving the appeal of our strong, diverse portfolio and the LEGO System in Play.”
“Despite the external market conditions, we continued to invest for the future and made good progress on digital, sustainability and retail initiatives that will support long-term growth. We are grateful for our dedicated colleagues who remain committed to our mission to inspire and develop the builders of tomorrow.”
Performance overview
Revenue grew two percent to DKK 65.9 billion vs. DKK 64.6 billion in 2022, in line with expectations. Excluding the impact of foreign currency exchange rates, revenue grew three percent compared with 2022.
Consumer sales grew four percent in 2023 vs. 2022, driven by strong growth in the U.S. and Central and Eastern Europe. This was offset by a decline in China due to the challenging economic environment.
Operating profit was DKK 17.1 billion down five percent vs. 2022 due to accelerated spending on strategic initiatives and changes in foreign currency exchange rates. Excluding the effects of currency, profit was down two percent. Operating profit in the second half of 2023 grew seven percent versus the same period in 2022 due to revenue growth and increased productivity. Net profit was DKK 13.1 billion in 2023 compared to DKK 13.8 billion in prior year.
Cash flow from operating activities increased one percent to DKK 15.4 billion from DKK 15.3 billion. The company invested DKK 8.5 billion mainly in offices and new and existing factories to expand capacity to support growth, up from DKK 6.0 billion in 2022. This resulted in free cash flow of DKK 6.9 billion in 2023 against DKK 9.3 billion in 2022.
Large, diverse portfolio appealed to builders of all ages & interests
The company’s portfolio was the largest ever with 780 products designed for fans of all ages and interests. As in previous years, new products accounted for around 50 percent of the portfolio.
The LEGO Group also launched innovative new play experiences including LEGO Fortnite, the first release from its partnership with Epic Games which aims to develop fun and safe digital spaces for children and families. LEGO DREAMZzz, the company’s first new homegrown theme in five years was introduced in the second half, preceded by the global release of a content series streamed on all major platforms.
The top performing themes were a mix of homegrown and entertainment IPs and included LEGO Icons, a range for older builders, LEGO® City and LEGO Technic alongside LEGO Star Wars and LEGO Harry Potter.
Accelerated strategic initiatives for long-term growth
Creating memorable experiences through retail platforms: The company continued to work to improve shopper experiences across its own and its retail partners’ channels. In 2023, the LEGO Group opened 147 new LEGO branded stores taking the global total to 1,031. It launched LEGO Insiders, a new membership programme to connect, reward and inspire fans.
Expanding global supply chain network: The LEGO Group continued to invest in expanding and upgrading its manufacturing capacity and capabilities in its factories in Hungary, Mexico, and China and building two new factories in Richmond, Virginia, U.S. and Binh Duong, Vietnam.
Advancing digital ambitions: The company’s team of digital experts grew by 27 percent vs. 2022 and supported new technologies to improve experiences for consumers, shoppers, retail partners and employees.
Building a sustainable future
The LEGO Group increased spending on environmental initiatives by 60 percent in 2023 vs. 2022 and by 2025 plans to have doubled its annual spend compared to 2023.
The company made further progress on efforts to make LEGO products more sustainable including introducing paper-based bags and increasing the use of more sustainable raw materials. In 2023, 18 percent of all resin purchased was certified according to mass balance principles, which translates into an estimated average of 12 percent renewable sources. There are plans to continue to increase the amount of mass balance resin purchased in 2024.
Through social responsibility programs, the LEGO Group impacted 9.8 million children in 2023, above its target of 8.8 million. These included its flagship Build the Change program which engaged more than two million children around the world on environmental issues.
Niels B. Christiansen said: “We know that play provides children with skills that help them achieve their potential. We are fortunate to be in a strong financial position to invest in activities that bring learning through play to children around the world and invest for the future, so we can continue to have a positive impact on children for many generations to come.”