Lego Group (Billund / Denmark; www.lego.com) is taking back responsibility for production at its plant in Kladno / Czech Republic from Singapore-based Flextronics (www.flextronics.com). Flextronics took over some Lego facilities, including the Kladno unit, in 2006 following an extensive relocation of Lego’s production – see Plasteurope.com of 26.06.2006.

Lego said in its 2007 financial report that because of significant challenges facing its business model it is optimising the relocated production to achieve planned cost savings. As a result, it will take over the Kladno processing and packing activities as well as global procurement of raw materials in its own and suppliers’ production.

The 700 staff at Kladno will change employer on 1 March 2008. Lego already owns the buildings and equipment at the site. The Danish toy maker will continue to manufacture with Flextronics in Mexico and Hungary. It also has production facilities in Denmark.

Lego said its 2007 results were better than expected. Pretax profits rose 10% to DKK 1.41 bn (EUR 190m), while revenues climbed 3% to DKK 8.03 bn. President and CEO Jorgen Vig Knudstorp said Lego was able to meet demand for its products despite the extensive relocation of production.

But the company faces heavy challenges in 2008, including the economic downturn in the US, he said. “We will continue the efforts to reduce production costs, and we expect the increasing oil prices as well as the declining dollar rate to put the group’s earnings under pressure.”

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Lego Group annual report 2007 as PDF document (2,735 KB)