Pretax earnings at Europe's biggest toy manufacturer rose to 1.9 billion crowns ($321.3 million) from 1.4 billion in 2007.

Lego faces intense global competition in the $50 billion global toy market and the challenge of children outgrowing traditional toys earlier in favour of online distractions and video entertainment.

The Billund-based firm said nearly all its markets reached two-digit growth rates last year.

Especially the English-speaking markets saw extraordinarily high sales increases, which resulted in considerable increases of the LEGO Group's shares of these markets, the company said in a statement.

Sales rose 19 percent to 9.5 billion crowns from 8.0 billion.

The family-owned firm said classic product lines such as Lego City -- which often features police, fire fighter and rescue services -- and Star Wars products saw extensive growth last year. The launch of its Indiana Jones line was very successful, it said.

The firm also receives significant royalties from Lego-branded computer games featuring the heroes and villains from the two blockbuster movie franchises.

Lego said the development in 2009 was subject to great uncertainty and would be increasingly affected by the worldwide recession.

Nevertheless, the Lego Group expects moderate sales increases in 2009, Lego said.

The group returned to profit in 2005 after big losses in 2003 and 2004. (Reporting by Kim McLaughlin; Editing by Jon Loades-Carter)