LEGO Group Momentum Builds: 2007 Delivers Global Growth to World's Leading Construction Toy Maker

    NEW YORK, Feb. 19 /PRNewswire / -- AMERICAN INTERNATIONAL TOY FAIR --
 The LEGO Group today announced it achieved growth in 2007 across all of its
 key markets, attributable to a renewed strategic focus on balancing its
 core business and products with some of the strongest global licenses among
 children.
 
     Global performance
 
     The company's year-end result is considerably better than anticipated
 at the beginning of 2007, when both decreasing sales and decreasing revenue
 were predicted, as increasing investment activities and extensive supply
 chain outsourcing were expected to put heavy pressure on the Group's
 performance. However, the Group succeeded in producing at a level that
 matched much of the strong year-long demand in its markets.
 
 

     -- Profit for the year before tax reached $279 million USD against $253
        million USD in 2006.
     -- Net profit for the year amounted to $203 USD million against $255 USD
        million in 2006, which gives a return on equity of 71.6%.
     -- The Group's equity increased from $235 million USD at the end of 2006
        to $331 million USD at the end of 2007.
     -- Revenue amounted to $1.584 billion USD against $1.539 billion USD in
        2006, an increase of +2.9%. Adjusted for exchange rate movements in
        2007, the increase would have been approximately +6%.
     -- Profit before special items, financial income and expenses and tax
        amounted to $290 million USD in 2007 against $277 million USD in 2006.
     -- The operating margin (ROS) was 18.1% against 17.0% in 2006.
     Note: conversion from DKK to USD uses the year-end exchange rate.
 
     "In the light of our expectations for 2007, I consider the results very
 satisfactory," said Jorgen Vig Knudstorp, CEO, LEGO Group. "It has
 particularly been very satisfactory for us that we have been able to meet
 most of the demand for LEGO products despite our extensive supply chain
 relocation activities. This has only been possible through the impressive
 effort made by our employees."
 
     U.S. highlights
 
     In the U.S., the company achieved its third consecutive year of
 consumer sales growth, again outpacing the U.S. toy industry. An +11.5%
 gain in consumer sales(1) over 2006 further bolstered the brand's #1 rank
 in construction toys, with category share increasing +6 points from 60% to
 66%, the highest level in five years, according to The NPD Group.
 
     A strong product portfolio balanced between homegrown classics and
 licensed lines drove U.S. sales of LEGO(R) products in 2007 to be four
 times larger than the next construction toy brand(2). The company
 successfully renewed its position of strength in non-licensed play theme
 products, evidenced by the simultaneous successful launches of three new
 themes in 2007 -- LEGO Aqua Raiders, LEGO Castle and LEGO Mars Mission --
 each individually delivering results on par with some of the strongest
 classic play themes in LEGO history.
 
     In a year of heightened competition from video games and consumer
 electronics, classic LEGO building sets fared extremely well, with the LEGO
 Brand ranking as #1 "most fun" among boys 6-8(3).
 
 

     Among product line highlights:
     -- LEGO CITY, the classic "downtown" theme and recruitment platform for
        builders ages 5 and older received the prestigious Toy of the Year
        Award for Best Activity Toy; meanwhile sales for the line have tripled
        since 2004, with 2007 U.S. line sales growing +45% over 2006.
     -- Sales of LEGO Creator, a line of classic build and re-build models were
        also up double-digit versus 2006.
     -- Collectible, authentic models, supported by another blockbuster video
        game release, drove LEGO Star Wars(TM) sales to the top of the
        company's U.S. chart in a non-movie year.
     -- Constructible BIONICLE(R) action figures maintained strength in their
        seventh year as the company's second strongest U.S. line.
     -- LEGO Racers took pole position as the third strongest line in the U.S.
 
     "We have successfully realigned our business strategy to balance our
 portfolio between core, classic LEGO play, homegrown stories and themes,
 and the best licenses in the industry to drive the strongest LEGO momentum
 we have seen in the U.S. in years," said Soren Torp Laursen, president,
 LEGO Systems, Inc., the company's North American division. "This
 accomplishment is perfectly timed to coincide with the 50th anniversary of
 the original LEGO brick in 2008. Our legacy of innovation to inspire and
 develop the builders of tomorrow through the highest quality, safest play
 experiences, combined with our continuing strength among American
 consumers, will lead us to growth in 2008."
 
     Expectations for 2008
 
     The global toy market is subject to great uncertainty in 2008. The
 trends of stagnation and recession seen in the U.S. during the last six
 months of 2007 and into 2008 may create pressure on the Group's
 performance. Historically, the LEGO Brand has weathered U.S. economic
 recessions very well, and leveraging the Brand's 2007 momentum, which
 continues year-to-date 2008, the company expects to achieve global sales
 growth of 3-5%, the first time it has planned for growth in the last three
 years.
 
     "In spite of the uncertainty of the U.S. economy and the increased
 competition facing the toy industry, we feel we are in a prime position to
 leverage the tremendous momentum we built in 2007, which is continuing year
 to date 2008, to achieve aggressive U.S. consumer sales growth to support
 our global growth plan," continued Laursen. "Our history of premium quality
 and commitment to safety, and our supply chain operations based in Eastern
 Europe and Mexico, are helping to ensure that many of the issues currently
 facing toy manufacturers are not as much of an impact for us."
 
     About LEGO Systems
 
     LEGO Systems, Inc. is the North American division of The LEGO Group, a
 privately-held, family-owned company based in Billund, Denmark, one of the
 world's leading manufacturers of creatively educational play materials for
 children. The company is committed to the development of children's
 creative and imaginative abilities, and its employees are guided by the
 motto adopted in the 1930s by founder Ole Kirk Christiansen: "Only the best
 is good enough." Visit the virtual LEGO world at http://www.LEGO.com
 
     LEGO and BIONICLE are trademarks of the LEGO Group. (C) 2008 The LEGO
 Group.
 
     (C) 2008 Lucasfilm Ltd. & TM. All rights reserved. Used under
 authorization.
 
 

      1 Source: The NPD Group / Consumer Tracking Service
      2 Source: The NPD Group / Consumer Data
      3 KidQ 2007
 
      MEDIA CONTACTS:
      LEGO Systems, Inc.
      Michael McNally
      860-830-5885 / press@america.lego.com
 
 

SOURCE The LEGO Group