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Baffling : Lego, making near-record profits, lays off 1,400 people

by Will Corry on October 13, 2017 in Latest News, Lead Article, News you can use, Nuggets

I am baffled by Lego’s recent decision to lay off 1,400 staff in a time of near-record profits.

Here are the facts: Lego’s revenue fell 5 percent in the first half of 2017 to 14.9 billion Danish kroner ($2.38 billion) compared with 15.7 billion Danish kroner in H1 2016. Net profit came in at 3.4 billion Danish kroner, compared with the first half of 2016’s 3.5 billion Danish kroner.

They will therefore lay off 1,400 people – approximately 8% of the workforce.

Normally in a situation like this I’d suspect leadership of doing layoffs to placate stockholders, but Lego is privately owned so that’s clearly not the case here.

Crucially, the company is not losing money. In fact, even though sales have fallen slightly, profits are essentially constant and at near-record levels for the company so it’s hard to see exactly what motivates this move.

What has really surprised me is that there has been no pushback or criticism from the financial press. It makes you wonder: What kind of a business climate are we living in when this kind of decision is met with nothing but approval from all observers?

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