The Lego Group reported its smallest increase in profit in three years even as demand has grown. The world’s largest toymaker faced higher costs and invested heavily in production to meet rising demand.

Net income rose 3.7% to 13.8 billion kroner ($2 billion) in 2022, the Billund, Denmark-based company said on Tuesday. Expenses jumped 22% and revenue rose 17% to 64.6 billion kroner, driving gains in market share. Lego grew online sales by about 10.5% in 2022, according to Digital Commerce 360’s estimates. Lego is privately held and does not release all financial information.

The LEGO Group is No. 129 in the 2022 Digital Commerce 360 Europe Database.

Lego opened stores and produced more toys

The maker of colorful building bricks, which is owned by the billionaire Kirk Kristiansen family, opened 155 new branded stores last year and increased production at three of its five factories. It’s also working on building two new large facilities in Vietnam and the United States. The company said it expects to win market share again this year with “single-digit” revenue growth.

Lego’s results were better than the company had expected, CEO Niels B. Christiansen said.

Earnings momentum “was driven by the investments made during this time, which are both paying off now and establishing a foundation for long-term, sustainable growth,” the CEO said in the statement. “We plan to accelerate investments in strategic initiatives in the coming years.”

Lego plans to hire 500 more digital experts in Denmark, the United Kingdom and China in addition to as many as 6,000 workers for its new factories in the U.S. and Vietnam in coming years, Christiansen said.

Other toymakers see declining demand

Lego’s hiring spree is an outlier in the the toy market, which shrunk last year. Its biggest rivals, Mattel Inc. and Hasbro Inc., both reduced headcount in 2022.

Lego’s U.S. rival Mattel Inc., which owns the Barbie brand, last month said it expects no revenue growth this year, while the other large U.S. toymaker, Hasbro Inc., said it sees a contraction. Hasbro cut its workforce by another 1,000 jobs, about 15% of workers, after a poor holiday season. Hasbro said the digital gaming business, including the Dungeons & Dragons and Magic the Gathering games, performed well. However, its traditional toy business faltered. Both companies said toy sales were down after a boom during the pandemic.

Mattel and Hasbro are No. 203 and No. 534, respectively, in the 2022 Digital Commerce 360 database of the largest North American online retailers by web sales.

Lego as a symbol of resistance

In 2022, Lego made headlines for its symbolism following the Russian invasion of Ukraine. The toy manufacturer said it had “paused shipments of products to Russia given the extensive disruption to the operating environment,” and donated more than $16 million to humanitarian organizations.

Polish illustrator Paweł Jońca was inspired by Lego’s blue and yellow similarity to the Ukrainian flag. He created a poster showing a red bear representing Russia, stepping on blue and yellow Lego blocks representing Ukraine.

“The proportions and colors refer to huge Russia and smaller Ukraine,” Jońca said. “The heaviness of the aggressor and the tenacity and persistence of the defender. Most viewers associated stepping on the block with their own experience and immediately thought, ‘Hope it hurts!’”

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