LEGO has dealt a major blow to counterfeiters in China by winning a court case against two companies that produce imitation LEGO products. This is the first case that LEGO has filed and won in China claiming unfair competition, following a ruling last month proclaiming LEGO to be a well known recognized trademark in the region.
The suit was filed against two Chinese companies including the company Bela Bricks that were producing sets nearly identical to those from LEGO’s Friends line as well as other top-selling products. According to the ruling from the China Shantou Intermediate People’s Court, the two companies must stop copying LEGO’s designs, packaging, and instruction books due to copyright infringement. Continue reading
According to their most recent press release, the LEGO Group’s revenue for the first half of 2017 is 5 percent down compared with the same period in 2016. Other key figures like operating profit as well as net profit are down too — 6 and 3 percent respectively. The board of management blames increased costs associated with investments in production capacity and organisational capabilities for causing mixed performance across various market regions. For instance, revenue has declined in the United States and in parts of Europe. On a brighter note, in growing markets such as China, revenue grew by double digits.
Commenting on the financial report, LEGO Group Chairman Jørgen Vig Knudstorp claimed that the company has already taken steps to change the situation for the better. The Group aims to bring the LEGO building experience to more children all over the world, and for this purpose the management is looking forward to resetting the company and revising and restructuring various internal processes.
Pressing the reset button includes some decisive moves which pursue a goal of simplifying the company’s elaborate global structure built during the past five years. “This means we will build a smaller and less complex organisation than we have today” said Knudstorp. As a result, the LEGO Group believes it would need to cut its total global workforce by around eight percent. This would impact about 1,400 positions. Currently the LEGO Group employs about 18,200 people.
One of the key goals of resetting the business is the development of innovative new toys. Knudstorp explains “We will find more opportunities to engage with kids and parents, including innovative ways to blend physical building and digital experiences, such as our successful LEGO Life social platform and LEGO Boost building and coding set”.
The full press release can be found on the LEGO Newsroom page.
Every year, the LEGO Group releases its financial results, providing an insightful look into the operations of the company. For 2016, the company reported the highest revenue in the company’s 85-year history at 37.9 billion DKK (approximately 5.38 billion USD), representing a 5.5 percent increase over 2015. Notably in the US, however, consumer sales were flat despite a significant increase in marketing spending from LEGO in the second half of the year.
After all expenses, that leaves The LEGO Group with a net profit of 9.4 billion DKK (approximately 1.34 billion USD), slightly higher than the year before. The net profit is calculated after subtracting all operating expenses, including costly construction projects like the LEGO House in Billund and a new manufacturing facility in China, which ate up nearly a third of LEGO’s overall net profits. Continue reading