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Abu Dhabi, UAETuesday 25 September 2018

Lego aims to stop making bricks from plastic

Family that owns Danish company behind a plan to make all of its colourful building blocks from sustainable materials

A Lego Windsor Castle replete with marriage of Britain's Prince Harry and Meghan Markle. Reuters
A Lego Windsor Castle replete with marriage of Britain's Prince Harry and Meghan Markle. Reuters

The chief executive of Lego says it’s difficult to know the financial implications of a plan - backed by one of Denmark’s richest families - to no longer make toy bricks from plastic.

“It’s hard to say,” Niels B.Christiansen said at Lego’s headquarters in western Denmark. “I’m not even sure that we currently yet can live up to the quality that we want. But it’s an agenda that we want to drive and an agenda that our owner is behind. We want to become a leader on this.”

Controlled by Denmark’s billionaire Kirk Kristiansen family, Lego brought in Mr Christiansen as CEO in October. The family is behind a plan to make all of Lego’s colourful building blocks from sustainable materials, such as sugar cane, by 2030. The shift, which was announced in March, is part of a global effort to fight plastic pollution and the threat it poses to marine life in particular. For now, the Danish company has started to offer small plant-based Lego sets as gifts in connection with large purchases.

Mr Christiansen says it’s not yet clear whether the shift can be brought about without hurting profit margins. The feeling at Lego is that there’s been a “breakthrough” on the path away from oil-based plastic production, but there are still many unknowns, he said. The company says the new plastic will be based on sustainable materials rather than fossil fuels.

“I think it’s too early to say whether it will be necessary” to sacrifice profit to achieve the company’s sustainability goal, he said. “But we won’t compromise on our quality.”

Mr Christiansen, who used to run Danish engineering giant Danfoss, was brought in by the Lego family to help trim the organisation after years of rapid expansion left it overly complex and difficult to steer.

On Tuesday, Lego reported another decline in first-half revenue and profit, which it said was due to a weak dollar. Adjusting for currency swings, Lego said profit grew from a year earlier amid.

Sales of Lego dinosaurs and a Bugatti sports car helped the toymaker stabilise revenue in the first half of this year after a drop in 2017 for the first time in more than a decade.

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Its attempts to recover have been hampered by the bankruptcy of the biggest US toy-store chain Toys'R'Us, but demand for new products such as the dinosaur-themed Jurassic World range helped to steady revenue in the first six months of the year.

"I am satisfied, because we set out to stabilise growth this year and we have already done it during the first half," Mr Christiansen told Reuters.

Overall, consumer sales grew 1 per cent during the half, while revenue was flat in constant currencies and fell 5 per cent in Danish kroner to 14.3 billion kroner (Dh8.18bn) - a far cry from the 25 per cent growth achieved in 2015.

epa06970824 A figure of superhero comic character Hulk is on display at a Lego Exhibition in Szczecin, Poland, 25 August 2018. The Lego exhibition runs until 21 October 2018. EPA/Marcin Bielecki POLAND OUT
A figure of superhero comic character Hulk at a Lego Exhibition. EPA

Mr Christiansen wouldn’t say whether any potential increase in production costs would be passed on to customers, in connection with the planned shift to plant-based toys.

“We have high quality products that offer a building experience as well as a playing experience and can be used for many, many years,” the CEO told Bloomberg. “Our prices are based on that rather than on whether the product is made from one thing or another.”

Lego is also trying to adapt its toy offering to a generation that’s spending more time on screens than on other forms of entertainment, such as building Lego structures.

“Many of our competitors are eager to know” just how many products Lego will digitise, Mr Christiansen said. “I prefer not to be too specific. But it’s one of the areas we’re investing in. So it’s safe to say there will be more.”

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