Lego expands production capacity in Mexico to meet US demand

Lego expands production capacity in Mexico to meet US demand

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Lego, the Danish toy company, best known for its building bricks, had a decline in revenue growth and profits for the first half of 2016, but only because the Danish toymaker needed time to add production capacity to meet increased demand for its colorful building bricks in North America, the company said.

The group saw revenue grow 11% in the six months to US$ 2.35 billion. Net profit fell nearly 2% to US$ 524 million.

Sales growth at the privately owned firm was strong in Europe and Asia, with double digit increases in both regions, but flat in the Americas.

Lego simply could not keep up with demand in North America, the world’s biggest toy market in 2015, so it reduced its marketing activities, which led to the slowdown in the first half of 2016, Chief Financial Officer John Goodwin told Reuters.

Lego continued its global investment programme in the first six months of 2016, with a new factory in Jiaxing, China starting to make parts and another in Monterrey, Mexico being expanded.

The firm has added more than 3,500 new employees in the first half of 2016, compared with 12 months previously, to bring the total workforce to 18,500 people globally.