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Li & Fung posts near stagnant sales in 2012

March 21, 2013 (Hong Kong)

Hong Kong-based Li & Fung limited the multinational consumer goods sourcing, logistics, and distribution group, announced 2012 annual results.
 
Highlights of results:
•Core operating profit was down by 42.0% to US$511 million 
•Decline mainly due to costs of restructuring LF USA’s business and reduction in the number of brands distributed in the US
•Profit attributable to shareholders decreased by 9.4% to US$617 million
•Turnover increased by 1% to US$20,222 million, reflecting ongoing strength of core trading business 
•Benefits from LF USA restructuring and cost control measures across the Group targeted by 2013
•Solid balance sheet with 13% gearing ratio and operating cash flow of US$586 million
 
Hong Kong-based Li & Fung Limited the multinational consumer goods sourcing, logistics, and distribution group, announced that turnover achieved in the year ended 31 December 2012 was US$20,222 million, 1% higher than the year before. Trading Network, Logistics Network and Distribution Network accounted for 70%, 2%, and 28% respectively of the Group’s turnover in 2012.  
 
In line with the Group’s profit alert announced on 11 January 2013, core operating profit declined by 42% to US$511 million in 2012, largely due to costs of restructuring LF USA’s business and reduction in the number of brands distributed in the US. 
 
Profit attributable to shareholders was US$617 million, representing a decrease of 9.4% compared to 2011.  Basic earnings per share was 58.1 HK cents (equivalent to 7.45 US cents), a decrease of 11.6% compared to 65.8 HK cents (equivalent to 8.43 US cents) in 2011. 
 
The Board of Directors has proposed a final dividend of 16 HK cents (equivalent to 2.1 US cents) per share (2011: 34 HK cents – equivalent to 4.4 US cents).
 
Mr. Bruce Rockowitz, Group President and CEO of Li & Fung Limited, said, “We recognized that our biggest management challenge was the restructuring of LF USA, which became more costly than originally envisioned. We took swift, decisive action to address the issue and also introduced strict cost control measures across the Group.”
 
He added, “We target to realize the benefits of these measures by this year. Meanwhile, we are putting into place the optimum organization to support the business of LF USA for the longer term.”
 
“The Group’s revenues tend to be skewed towards the second half of the year, which is traditionally when consumers in Western markets spend the most. This is no exception for this year as our customers assess economic trends and observe prevailing market conditions,” he said. 
 

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