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CNBC Transcript: Interview with Lego Group CEO, Jørgen Vig Knudstorp


Following are excerpts from a CNBC interview with Louisa Bojesen and Lego Group CEO, Jørgen Vig Knudstorp

On earnings...

JK: We don't provide any guidance about future years, but the company has now seen 10 consecutive years of organic growth, an average of 17/18 percent, so we're still confident that the company will continue to grow both on top line and bottom line in the future.

LB: You recently surpassed Hasbro to become the second largest toy maker on some levels. What happens if a group like Hasbro teams up with Mattel another big toy maker. There's been a lot of speculation about that since last year, where would that leave Lego?

JK: Well since the Lego groups founding the motto has always been 'we want to be the best not the biggest', I mean we're very singularly focused on the legal brick and that one particular brand, we don't do a portfolio brand so we have scale in our own right within the segment that we uniquely focus on and that's how we sort of measure our strength. If other players combine or do not combine, I think it has a relatively small impact on the Lego group.

LB: You pay licensing fees to be a part of some very big hits like Star Wars for example, Harry Potter. Your Disney characters, they're going to be sold in shops from the first of May, you've got Mickey Mouse, Mini Mouse coming out via Lego, my little mermaid characters, Alice in Wonderland, the list goes on. Can you be anything these days in the toy industry if you don't have a strong relationship with Disney?

JK: Licensing partners are a huge opportunity for us but today they are about a third of our portfolio and that has been the case for more than 10 years now, so they are an important, let's say spice, an interesting way of developing our portfolio, providing some novelty. But among our top five selling themes there's only one licensed theme and that's Star Wars which has been with us since 1999.

On digitalisation...

JK: Certainly digitalisation has been a huge opportunity for the Lego group. We are one of the most sought after video games worldwide, we are launching products that combines digital and physical. So I think overall digital has been a huge opportunity for us with a brand that so much engages its fans and consumers, so we view it as an opportunity for leverage and opportunity for building deeper relationships and providing greater product and selling experiences. But I think, you know, Lego rest on the idea of the physical brick, that's what's makes it really unique so it's a bit like, people like watching TV or seeing soccer or playing soccer and video games, but still if they see a football on a piece of grass they can't help themselves to sort of kick the ball and that's the same with a Lego brick.

LB: But you've always been at the forefront of new technologies. I mean initially, Lego was founded to be a wooden toy company, that then became plastic. What's next? I mean virtual reality is that something you're looking at for example, what are the new technologies?

JK: Absolutely I think we will continue to explore technologies as they come along but I think their major distinction between us and let's say, if you were a book publisher or a music publisher, is that the physical product still remains essential and that we are more like in Nike or a Starbucks, you know. Digital is a great enhancer but it doesn't replace the fundamental basic physical product experience.

LB: Do you work with next generation content providers as well like Netflix, YouTubers?

JK: We certainly do. Netflix is already distributing our short and long form content and we see that more and more. I mean essentially children are spending a lot of time on their iPads now. Before that they spent a lot of time watching flow television. Today they stream, they watch YouTube and that's why we need to be on those platforms and we are very strong on those platforms already.

On Europe...

JK: Sometimes maybe Europe forgets how strong it is. It's the home of some really, truly great global competitors and it is still one of the world's biggest economic zones. I think Europe has a lot to offer in creative design talent, in running a non-corrupt, highly efficient business in a fairly straightforward governmental environment - that prepares us really well to compete in the rest of the world so maybe sometimes we're maybe bashing ourselves more than we should be doing.