COPENHAGEN: Danish toy maker Lego, known for its iconic coloured plastic bricks, said on Tuesday that it would cut eight per cent of its global workforce after a drop in sales in the US and Europe.
The company recorded a five per cent decline in turnover in the first half of the year to 14.9 billion kroner (S$3.2 billion), with net profit down by three per cent to 3.4 billion.
Operating profit fell by six per cent to 4.4 billion kroner due to “lower revenues and increased costs”.
The world-renowned brand has strongly diversified in recent years, moving into areas such as video games, a hit movie that will have several sequels, cartoons and Legoland amusement parks.
“In the process, we have added complexity into the organisation which now in turn makes it harder for us to grow further,” Lego chairman Jorgen Vig Knudstorp said in a statement.
The company would be turned into a “smaller and less complex organisation than we have today, which will simplify our business model in order to reach more children,” he added.
However, this would mean slashing 1,400 jobs around the world before the end of 2017. Lego currently employs around 18,200 people.
Lego’s announcement comes only months after it in March posted record revenues in 2016 which jumped by six per cent from 2015 to 37.9 billion kroner, for a net profit up two per cent to 9.4 billion.