Lego has recorded the strongest decline in profits over the past two decades

Lego, the legendary company that manufactures children's construction sets, has recorded the strongest decline in operating profit in the last two decades. In the first half of 2023, the company's profit decreased by 19% to DKK 6.4 billion (or $938.7 million) compared to the same period last year.

This was reported by the Financial Times, referring to the company's reports.

"Lego has suffered its worst profit decline in nearly two decades as revenues slump after a huge surge caused by the Covid-19 pandemic," the newspaper writes.

According to the company, sales in the first half of the year rose 1% to 27.4 billion Danish kroner (or $4 billion), but operating profit fell 19%, the largest decline in the last twenty years.

The company's CEO Niels Christiansen told the Financial Times that he remains satisfied with the situation, as Lego manages a very complex toy industry and holds on to being the world's leading manufacturer in terms of sales and profits.

The CEO said that the drop in profits was due to "extraordinary factors" such as rising raw material price inflation and investments in new factories, software engineers and sustainability.

Christiansen emphasized that the company is far from the last crisis in 2017, when sales and profits declined and market share shrank.

According to the FT, Lego has been incredibly successful during the pandemic. In the first half of 2021, the company's operating profit more than doubled, which Christiansen called "unsustainable" at the time.

Lego plans to open two new factories in Vietnam and the United States, one in 2024 and the other in 2025, and expand four of its five existing factories. In addition, the company plans to triple its sustainability spending to $3 billion a year by 2025, focusing on eliminating the use of plastic made from fossil fuels.