Spokeswoman Charlotte Simonsen would not disclose how much Lego is investing in the expansion but says the firm is installing new molding machines and molds at its three injection molding plants in Denmark; Nyíregyháza, Hungary, and Monterrey, Mexico.

"We are installing hundreds of machines in these three areas,” she told European Plastics News. “The installation began earlier this year and will continue up to the beginning of 2010.”

The firm has also started construction of a new warehouse facility at a plant in Kladno in the Czech Republic.

Lego is planning the expansion because of both profit and sales growth for the first half of the year. Net sales for the period ending June 30 were up 23 percent to 4.4 billion Danish krone ($840 million or 5.8 billion yuan), compared to DKK 3.6 billion ($690 million or 4.7 billion yuan) last year. Profit before tax jumped a massive 65 percent to DKK 927 million ($177 million or 1.2 billion yuan) from DKK 564 million ($107 million or 743 million yuan).

The firm says it achieved double digit growth in sales in all of its markets, despite a slowdown in the global toy market.

CEO Jørgen Vic Knudstorp described the figures as “a very satisfactory result”, despite having some doubts over the full-year results.

"As the bulk of toy sales occur during the last few months of the year, considerable uncertainty remains about the full-year result,” he said in a news release. “But based on the fine results achieved in the first half of the year, we are optimistic.”

Lego is bringing its injection molding operations back in-house, after reversing a 2006 decision to outsource production of its colorful building blocks to Singapore-based Flextronics International Ltd.

Lego is based in Billund, western Denmark, and employs 4,500 worldwide. The company is not publicly listed but has published earnings reports since 1997.