It has kept about 300 million children amused worldwide since it first appeared 73 years ago. But it seems the simple appeal of Lego is being threatened by the world of computer games and MP3 players.
The Danish toymaker behind the famous building blocks yesterday posted its biggest ever annual loss as it struggles to compete with cheap toys from China, the weakening dollar and young children's growing obsession with electronic gismos and mobile phones.
The 2004 net loss of €255 million was more than double the loss the previous year.
Revenues, which slumped 7 per cent, were additionally hit by demands for heavy discounts from major grocery chains which have increased their share of the retail toy market at the expense of specialist stores.
Lego said that last year the global market for traditional toys shrank by about 2 per cent while the market for electronic toys, such as video consoles and computer games, enjoyed a minor increase.
But in the toymaker's battle for children's pocket money the biggest hurdle last year was youngsters' increasingly adult tastes.
Lego chief executive Jorgen Vig Knudstorp was optimistic, however, on future prospects despite the difficulties of 2004.
He said that the toymaker had cut costs as a result of increased competitiveness and by sharpening its focus on core products. The toymaker made no statement about its progress on finding a buyer for its theme parks, a divestment it announced last year. Visitor numbers to the four Legoland parks in Denmark, the UK, Germany and the US rose 3 per cent in 2004, but the unit's profits after tax fell 26 per cent to €2.7 million.
Still a family-run company, it started out small. In 1932, a carpenter named Ole Kirk Christiansen and his 12-year-old son, Godtfred, started making toys in the town of Billund, Denmark.
They decided that a good name for their company would be Lego, which means "play well" in Danish and also, they discovered, happens to mean "put together" in Latin.
When plastic became available after the second World War, Lego introduced plastic toys and bricks.
The international Lego group is now worldwide, and is run by Kjeld Kirk Kristiansen, Ole Kirk Christiansen's grandson.