Danish toy manufacturer Lego (Billund / Denmark; www.lego.com) appears to have turned the corner after a challenging period and has reported 2006 pre-tax profits more than trebled at DKK 1.53 bn (EUR 210m), compared with DKK 468m the previous year. Sales increased by 11% to DKK 7.82bn. The company went through a financial reconstruction in 2004 and 2005. It said that this had led to the "highly satisfactory" 2006 results. The focus in 2006 to 2008 will be on building a profitable core platform, it added.

The company said that the increase in revenue is evenly distributed across its markets including direct sales to consumers. It said that there had been better than expected sales growth in for its re-launched, classic product lines. Added to this, retailers´ inventories at the beginning of 2006 were extraordinarily low and were increased to a healthier level during the year.

The simplification of the company structure is expected completed during the spring of 2007. All activities on the toy market will be united in the Lego Group. The board of directors of Lego Holding will consist of Kjeld Kirk Kristiansen (Chairman), Thomas Kirk Kristiansen, Mads Øvlisen and Peter Gæmelke.

Lego Group forecast slightly lower revenue in 2007 than in 2006 and said that its most significant challenge in 2007 will be the continued changes in its business model, in particular the outsourcing of the majority of production, which will have a negative effect on pretax profits in the year.

e-Service:
Lego annual report 2006 as PDF document (2,650 KB)