March 9, 2017 / 10:08 AM / 2 years ago

Toymaker Lego looks to China and programmable robots for growth

COPENHAGEN (Reuters) - Lego is counting on capturing the imagination of Chinese children with its colorful plastic bricks while keeping kids in its core markets engaged with programmable robots, its new chief executive said on Thursday.

The privately-owned toymaker, whose global sales are surpassed only by Barbie doll maker Mattel (MAT.O), reported a slowing in growth in 2016 to six percent from more than 25 percent the previous year as its core markets in Europe and the United States saturate.

Its sales in China however, although coming from a low level, are growing by 25-30 percent year-on-year.

“The brand is not that well-known in China so we have to build a brand... a big part of our franchise is basically unknown,” Bali Padda told Reuters in a telephone interview.

India, where Padda was born and lived until he was 12, is also a focus, the company has previously said.

While plastic bricks will remain at the heart of Lego — derived from the Danish “leg godt” meaning “play well” — it will continue developing products with digital features and through partnerships with brands such as Walt Disney’s (DIS.N) Star Wars.

This year will see the launch of Lego Boost, a series of figures with motors and codable bricks enabling your Lego figure to be programmed via an app to walk, talk and even break wind.

“We have to convince the child every year that Lego continues to be relevant so we need to ensure the innovation is there,” Padda said.

Under his predecessor, Jorgen Vig Knudstorp, sales increased by more than 15 percent a year on average for more than a decade.

People building Lego christmas trees in the world's biggest Lego store in Leicester Square in London, Britain November 17, 2016. REUTERS/Stefan Wermuth

Padda said a mid-single-digit growth rate is more realistic for the years to come.

“The supernatural growth we’ve had is something that is highly unusual, and where we are now is more sustainable,” Padda said.

Lego reported 2016 revenue of 37.9 billion Danish crowns ($5.38 billion), just below Mattel Inc’s $5.46 billion but ahead of My Little Pony producer Hasbro Inc (HAS.O), which has reported sales of $5.02 billion.

Editing by Terje Solsvik and Elaine Hardcastle

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