- Prachi Singh |
Li & Fung Limited has said in a statement its core operating profit (COP) decreased by 22.9 percent to 228 million dollars for the year to December 31, 2019 due to reductions in turnover and margin pressure in the Supply Chain Solutions business. The company added that turnover decreased by 10.1 percent to 11.4 billion dollars due to continued destocking by customers, store closures and customer bankruptcies, as well as the company exiting a number of higher-risk and non-strategic customers. Net profit attributable to shareholders was 17 million dollars representing a return to profitability, while adjusted profit decreased by 43.9 percent to 74 million dollars. The company also announced that its board has received a proposal to privatise Li & Fung.
Commenting on the results, Spencer Fung, Group CEO of Li & Fung, said: “While our financials were affected by strong headwinds in the retail sector and global markets, we achieved important gains in our goal of creating the Supply Chain of the Future in our recently completed three-year plan. We are successfully transforming from a traditional, analog agent into a unique digital supply chain service provider. We now have a leadership position in 3D digital product development and are delivering a suite of value-added services to our customers.”
Review of Li & Fung’s annual trading
The company further said that its board of directors do not recommend the payment of a final dividend for the year based on the benchmark against profit attributable to shareholders for the year and also taking into account the economic uncertainties as a result of the COVID-19 virus outbreak. An interim dividend of 1 Hong Kong cent per share was paid by the company on September 19, 2019.
With strong demand for in-country logistics services, Li & Fung said, its logistics business turnover increased 3.5 percent to 1.2 billion dollars and COP increased 1 percent to 94 million dollars, driven by strong growth momentum in China, e-logistics growth, expanded relationships with core customers in the ASEAN region, and solid results in the new markets of Japan, Korea and India.
Commenting on how the COVID-19 outbreak is affecting global supply chains, Spencer Fung added: “We are working around-the-clock with our customers and suppliers during this period of deep uncertainty. Our teams on the ground across the world are actively supporting customers, just as we did during the US-China trade war to help address the disruptions to their business.”
A consortium of the Fung family along with Singapore-based GLP Pte Ltd., an investment management firm specializing in logistics, has offered 1.25 Hong Kong dollars per share to take the company private, the company said in a statement.
Picture:Li & Fung