LEGO's Supply Chain Builds Foundation for Record Growth
LEGO is one of very few organisations whose products and branding are recognisable almost anywhere in the world.
Founded almost a century ago, its mission today is to inspire and develop the builders of tomorrow through the power of play.
Despite ongoing downturn in the toys and games market, LEGO continues to well and truly lead the way after posting its strongest-ever H1 results, with double-digit top- and bottom-line growth.
Much of this can be put down to its efforts in the supply chain and operations efforts, which is providing the foundations for the group to increase its market share.
Supply chain investments drive success
LEGO's success can largely be attributed to its strategic investments in supply chain and operations.
The company has expanded its global supply chain network, ensuring that production and distribution facilities are strategically located near major markets.
Recently, LEGO opened a new European Regional Distribution Centre in Belgium and is actively constructing two new factories in Vietnam and Virginia, set to open in 2025 and 2027, respectively.
LEGO has also increased capacity at its existing factories in Mexico, Hungary and China.
Carsten Rasmussen, COO at LEGO Group, expressed pride in the role operations have played in the company's revenue growth of 13% and consumer sales growth of 14% – significantly outperforming the toy industry.
He adds: “We continue to invest in expanding our global supply chain network, maintain a strong focus on harvesting productivity and have made significant progress on our sustainability ambitions by increasing the amount of sustainable raw material used in our products.”
In H1 2024, Operating profit grew by 26%, while net profit increased by 16% compared to H1 2023.
Commitment to sustainability
Sustainability remains a key focus for LEGO. The company has been working diligently on initiatives throughout its supply chains, aiming to increase the amount of resin sourced from sustainable materials.
During H1 2024, LEGO reported that almost a third (30%) of all resin purchased was certified mass balance, translating to an estimated 22% of material coming from renewable and recycled sources.
This marks a significant improvement from 2023, when only 18% of the total resin was certified mass balance, equating to 12% from sustainable sources.
Looking ahead, LEGO aims to source more than half of its raw materials from sustainable sources via the mass balance principle, thereby reducing its reliance on virgin fossil materials.
The company has also intensified its efforts to cut greenhouse gas emissions, launching a Supplier Sustainability Programme that requires suppliers to set emissions reduction targets by 2026 and further reductions by 2028.
An annual carbon emissions reduction KPI linked to employee bonuses has also been implemented.
Strategic initiatives for long-term growth
LEGO's impressive top-line growth is driven by robust demand for its extensive portfolio, particularly in the Americas and Europe.
The company has increased spending on strategic initiatives aimed at fostering both short- and long-term growth, particularly in sustainability, retail and digitalisation.
Niels B Christiansen, CEO at LEGO, commented on the company's performance: “We’re very pleased with our strong performance in the first half.
"We delivered double-digit growth on the top- and bottom-line and made significant progress on increasing the amount of sustainable materials used in our products.” He added, “Our portfolio continues to be relevant for all ages and interests and this is driving significant demand across markets.
"We used our solid financial foundation to further increase spending on strategic initiatives, which will support growth now and in the future to enable us to bring learning through play to even more children.”
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