Li Ning Company Limited, one of the leading sports brand companies in China, announced its results for the six months ended 30 June 2013. Revenue amounted to RMB2,906 million, representing a year-on-year decrease of 24.6%, partly due to sell-in reduction to release cash flow pressures for channels. Gross profits were RMB1,266.4 million, representing a year-on-year decline of 24.0%.
- The Group recorded revenue of RMB2,906 million, which represents a decrease of 24.6% year-on-year, due to near-term focus on sell-in reductions, inventory clearance as well as store rationalization
- EBITDA for the six months ended 30 June 2013 was RMB58 million; Loss attributable to equity holders for the six months ended June 2013 was RMB184 million
- Operating cash flows improved and capital structure rationalized in 1H 2013
- The first phase of the Transformation Plan has achieved favourable results in (i) Improving the financial health of distributors through sell-in reductions and channel inventory clearance; (ii) Rationalising store network in keep with our transforming business model; (iii) Enhancing performance of new products
Loss attributable to equity holders was RMB184.2 million compared to a profit of RMB44.3 million in the same period last year. Loss per share was RMB15.19 cents. The Board of Directors resolved not to declare an interim dividend for the six months ended 30 June 2013 considering current operating conditions.
The first half of the financial year was a time of transition for Li Ning Company as the early results of the Transformation Plan began to show real progress, while the Company continued to operate in a challenging environment. Li Ning Company's management adhered to the three strategic pillars - core market (China), core brand (LI-NING) and sports culture, and achieved what it set out for the first phase of the Transformation Plan, particularly in the following areas: (i) improving channel financial health, including channel inventory clearance and reduction of sell-in to ease cash flow pressures for channel partners; (ii) resizing the business, including rationalization of the store network; (iii) enhancing the performance of new products; and (iv) improving cash flows and rationalizing capital structure.
Mr. Li Ning, Founder and Executive Chairman of the Group, commented, "China's sports industry faces challenges including the hangover from over-expansion, competition from casual wear and the need to meet the more sophisticated consumer tastes of rising China. The market is currently choked with undifferentiated local brand products. As a leading sportswear brand with unique sportsmanship heritage, we think that taking a bold and differentiated strategy is the winning plan. I believe that China deserves a domestic sportswear brand champion and the transformation we've been undertaking will help us to realize this vision."
Mr. Li continued, "With a new Chief Financial Officer and Chief Human Resources Officer joining us in the first half of this year, our senior management is now fully in place. We have a first rate team with improved management systems and processes to unleash our full potential as we continue to execute against our strategic vision."
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