960424

Computers,

hard competition

slash Lego 1995 profit

COPENHAGEN: Denmark's Lego group, maker of colourful children's plastic building bricks, on Wednesday reported its 1995 profits were halved by stiff competition in markets increasingly dominated by computer games.

"PC and CD-ROM products increased their market share and the retail trade, including traditional toy shops, continued to experience hard times, resulting in intense price competition everywhere," The family-owned company said in its annual report.

"The average family's consumption fell in a number of our most important European markets, competition for children's play time has increased drastically in recent years," it said.

Lego A/S, the Danish holding company for 23 of the group's 50 companies, said net profits fell to 239.6 million Danish crowns ($40.85 million) in 1995. That was just over half 1994's 470.6 million crown profit, with turnover 8.6 percent lower at 5.2 billion crowns.

In a statement Lego pledged to take on the competition in the children's computer field, announcing an array of new products for launch in 1996 including a Lego CD-ROM and other computer games.

It listed family parks as a key activity, noting that its first Legoland theme park outside Denmark opened in Windsor, west of London in March this year. A second park is due to open in San Diego, California in 1999.

The Legoland children's park in Billund, west Denmark, a showplace for Lego's model buildings and toys, is the country's second biggest tourist attraction after Copenhagen's Tivoli Gardens, attracting a record 1.3 million visitors last year.

Lego said its 1995 results failed to fulfil expectations, even though sales by retailers to consumers increased globally by almost four percent from 1994.

While sales showed healthy increases in North America, the Far East -- notably Japan, China, South Korea -- and South Africa, other overseas markets were stagnant, especially Taiwan and Brazil. Brazilian sales fell by 32 percent.

Western Europe also stagnated with a six percent sales drop compared to 1994's five per cent rise. But major advances were noted in most of eastern Europe, with sales almost 35 percent up.

Lego said its worst setbacks last year were in Germany, Switzerland, Austria, Hungary and Britain with sales reductions of up to 17 percent reported.

Lego's biggest markets are Germany, the United States, France, Britain, Japan, Italy, South Korea, the Netherlands, Canada and Switzerland.

The only European company among the world's top 10 toymakers, Lego employs 8,890 staff in 29 countries. It has factories in Denmark, Switzerland, the United States, South Korea and Brazil moulding over 100 million sets of bricks a year. Lego makes 97 percent of its sales abroad.

Founded in 1932 by the Kirk Kristiansen family, which still controls it via holding companies in Switzerland, Lego is not stock exchange listed.-Reuter