Toymaker Lego said Wednesday itis on track to replace the fossil fuels used in making its signature bricks with more expensive renewable and recycled plastic, as sales and profits surged.
The Danish company reported that profit for the first half of the year jumped 26% to 8.1 billion Danish krone ($1.2 billion). Sales to consumers grew 14%, considerably outperforming the wider toy industry.
In an interview with CNN, CEO Neils Christiansen pointed to the brand’s strength “throughout the world with all consumers.”
“Our product portfolio resonates super well across ages and interests,” he added.
Lego’s blockbuster results come even though toy sales globally have suffered as consumers cut back on non-essential spending. Hasbro (HAS) announced plans to cut 20% of its workforce late last year due to the sales slump.
Greener plastic
Lego, which sells billions of plastic bricks annually, has tested over 600 different materials to develop a new material that would completely replace its oil-based brick by 2030, but with limited success.
Now, Lego is aiming to gradually bring down the oil content in its bricks by paying up to 70% more for certified renewable resin, the raw plastic used to manufacture the bricks, in an attempt to encourage manufacturers to boost production.
“This means a significant increase in the cost of producing a Lego brick,” Christiansen told Reuters.
He said the company is on track to ensure that more than half of the resin it needs in 2026 is certified according to the mass balance method, an auditable way to trace sustainable materials through the supply chain, up from 30% in the first half of 2024.
Lego aims to make all of its products from renewable and recycled materials by 2032. The company will absorb the additional cost for now in the hope that its investment will spur the companies making these materials to increase volumes.
“With a family-owner committed to sustainability, it’s a privilege that we can pay extra for the raw materials without having to charge customers extra,” Christiansen said. “We don’t see consumers really ready to take on the cost,” he told CNN.
The move comes amid a surplus of cheap virgin plastic, driven by major oil companies’ investments in petrochemicals. Plastics are projected to drive new oil demand in the next few decades.
Lego’s suppliers are using bio-waste such as cooking oil or food industry waste fat as well as recycled materials to replace virgin fossil fuels in plastic production.
The market for recycled or renewable plastic is still in its infancy, partly because most available feedstock is used for subsidised biodiesel, which is mixed into transportation fuels.
According to Neste, the world’s largest producer of renewable feedstocks, fossil-based plastic is about half or a third of the price of sustainable options.
“We sense more activity and willingness to invest in this now than we did just a year ago,” said Christiansen. He declined to say which suppliers or give details about price or volumes.
Rival toymaker Hasbro has started including plant-based or recycled materials in some toys, but without setting firm targets on plastic use. Mattel (MAT) plans to use only recycled, recyclable or bio-based plastics in all products by 2030.
Around 90% of all plastic is made from virgin fossil fuels, according to lobby group PlasticsEurope.
— Anna Stewart contributed reporting.
