Li & Fung bullish about future despite loss
Li & Fung’s divestment of its furniture, beauty and sweater businesses for US$1.1 billion late last year has resulted in a $375 million loss, despite a solid core operating surplus.
In a challenging operating environment, Li & Fung saw revenue fall 8.3 per cent year on year to $13.53 billion as customers – both brand owners and retailers – continued to reduce inventories.
But core operating profit grew 11.8 per cent to $356 million.
The company said the loss from its divestment would have no impact on the company’s future cash flow, or operational and financial performance. About half the cash raised from the sale will fund expansion in its core business of supply chain solutions and logistics, which delivered growth of 21.8 per cent in core operating profit. The balance will be paid to shareholders by way of a special dividend.
“Our strategy to further simplify the business and focus on our core supply chain solutions business is in turn helping our customers to revamp their business model and counter disruptions in other markets,” group chairman William Fung said.
“We are on track to deliver a fully integrated digital platform that connects our suppliers and customers with end-to-end visibility to enhance decision making.”
CEO Spencer Fung said the company’s new three-year plan was on track to meet financial targets and strategic goals.
Li & Fung has a global network of 15,000 suppliers in more than 40 markets and the company says it is well-positioned to absorb any shock from trade uncertainty.