COPENHAGEN (BLOOMBERG) - The man who pulled Lego out of an existential crisis to turn it into the world's most profitable toymaker is stepping down as chief executive officer and will instead lead a new branding division within the group.
CEO Jorgen Vig Knudstorp, 48, will be replaced by 60-year-old chief operations officer, Bali Padda, at the end of the year, Lego said on Tuesday.
The company, which has its headquarters in western Denmark and is controlled by the billionaire Kirk Kristiansen family, brought in Mr Knudstorp in 2001 after he had worked for them as a McKinsey & Co. consultant. When he was promoted to CEO in 2004, Lego was losing about US$1 million (S$1.42 million) a day as its traditional plastic building blocks were unable to compete with a growing range of electronic toys.
From 2005 to 2015, Mr Knudstorp helped revenue jump five-fold to 35.8 billion kroner (S$7.4 billion). The CEO set up research teams to study how children played with the iconic building blocks, and supervised a shift in financial governance to make Lego less vulnerable to credit crunches.
Under Mr Knudstorp, the company expanded its franchise deals with building block sets based on Hollywood movies, including Star Wars and Indiana Jones. He also introduced Lego Friends, a series aimed at girls. Last year, Lego reported net profit of 9.17 billion kroner, beating results at its US rivals Mattel and Hasbro several fold.
Mr Padda, who was born in India in 1956, has been with Lego since 2002. He will be the first non-Dane to run the 84-year-old company.
Lego plans to set up a new entity, to be called the Lego Brand Group, which Knudstorp will chair. The unit will focus on the long-term potential of the company's brand.
"With our recent growth and globalization come new and exciting opportunities for the brand, and we establish the Lego Brand Group to look into these new opportunities," Thomas Kirk Kristiansen, who is the fourth generation in the family to own Lego, said in a statement.