Supply Chain Provides Building Blocks for LEGO’s 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 space, which is providing the foundations for the group to increase its market share. 

Investment in the supply chain network

LEGO has continued to expand its global supply chain and operations network, ensuring production and distribution facilities are close to major markets. 

In recent months it opened a new European Regional Distribution Centre in Belgium and continued construction of two new factories in Vietnam and Virginia, US, set to open in 2025 and 2027 respectively. 

The business also continued to expand capacity at its existing factories in Mexico, Hungary and China.

Carsten Rasmussen, COO at LEGO Group, said he was “proud” of the role operations had played in helping the organisation achieve revenue growth of 13% and consumer sales growth of 14% – significantly outperforming the toy industry.

Operating profit grew by 26% and net profit by 16% when compared to H1 2023.

Carsten added: “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.”

LEGO’s bid to build a sustainable future

As indicated by Carsten, LEGO has been working tirelessly on sustainability initiatives throughout its supply chains. 

The company continued to increase the amount of resin it purchased from sustainable sources certified under the mass balance principle, with the aim of helping accelerate the industry’s transition to more sustainable, high-quality materials. 

During H1 2024, almost a third (30%) of all resin purchased by LEGO was certified mass balance, which translates an estimated 22% material from renewable and recycled sources.

This represents significant improvement on 2023, when, for the full year, 18% was certified mass balance, equating to 12% sustainable sources. 

In the coming years, LEGO is looking to purchase more than half of its raw materials from sustainable sources via the mass balance principle, reducing its use of virgin fossil materials in the process. 

H1 also saw the business intensify its focus on activity to reduce greenhouse gas emissions, including through the launch of a Supplier Sustainability Programme which requires suppliers to set targets to reduce emissions by 2026 and further by 2028, as well as an annual carbon emissions reduction KPI linked to employee bonuses.

Spending on strategic initiatives intensifies

LEGO’s strong top-line growth is driven by demand for its large and diverse portfolio, especially in the Americas and Europe, in addition to what it calls “excellent execution” in all markets. 

Spending on strategic initiatives designed to drive short- and long-term growth – predominantly in the areas of sustainability, retail and digitalisation – has continued to increase and will be further accelerated in the second half of the year.

“We’re very pleased with our strong performance in the first half,” comments Niels B Christiansen, CEO at LEGO. “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.

“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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