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Li & Fung H1 turnover decreases by 8.4 percent

By Prachi Singh

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In its interim results announcement for the six months, Li & Fung Limited, supply chain solutions partner for brands and retailers, said, on a like-for-like basis, turnover decreased 8.4 percent to 5,356 million dollars mainly due to ongoing destocking, customer turnover and customer bankruptcies as brands and retailers continued to face pressure on sales and margins. The company’s core operating profit decreased 18.6 percent to 105 million dollars.

Commenting on the first half results, Spencer Fung, Group CEO of Li & Fung, said in a statement: “The new management team has been focused on restructuring the company and all operational KPIs are now improving for both our customers and suppliers. We are starting to gain momentum and winning market share and new customers due to our operational excellence, global diversified network and 3D virtual design services. As a result, turnover decline is stabilizing and beginning to bottom out.”

Total margin as a percentage of turnover was 10.9 percent in the first half. Operating costs decreased 1.4 percent to 478 million dollars, while operating costs of the onshore wholesale business decreased by 9 percent due to the company’s ongoing restructuring efforts, particularly in the United Kingdom. Turnover and COP of the logistics business increased 3.8 percent and 6.4 percent to 563 million dollars and 43 million dollars, respectively. On a constant currency basis, COP increased by 10.8 percent. Profit attributable to shareholders was 21 million dollars compared to 2018 interim loss of 86 million dollars on a reported basis. The board of directors declared an interim dividend of 1 Hong Kong cent per share.

“We are facing increasing geo-economic instability and uncertainty. Regardless of other factors, the acceleration of the migration of production out of China will continue given China’s upgrading of its industrial base from a manufacturing exporter to a high-technology service provider. The proliferation of bilateral free trade agreements has become the new norm, and this presents Li & Fung with opportunities not seen for the past 20 years,” added Group Chairman William Fung.

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