Li & Fung operating profit rises 13.3% to $356 million

For full year, turnover stabilised due to enhanced service offerings by the company, with a decrease of 4.6 per cent to $13.5 billion, and total margin as a percentage of turnover increased from 9.9 to 10.2 per cent. Ongoing measures to improve operating efficiency and productivity resulted in an operating cost decrease of 5.8 per cent. Core operating profit as a percentage of turnover increased from 2.2 to 2.6 per cent.

During 2017, the company also maintained a strong balance sheet and furthered the goal of maximising flexibility in its capital structure. The strategic divestment of the three product verticals businesses (furniture, beauty and sweaters) will generate $1.1 billion in proceeds to strengthen the capital structure and return cash to shareholders through a special dividend. The resulting simplification of the business will enhance management’s focus on core competencies and to build the digital supply chain of the future.

"Our new three-year plan had a strong start in its first year and we are on track to meet our financial targets and strategic goals. Customers are embracing our supply chain solutions and digital tools to help them improve the speed of their supply chain, helping them realise tangible improvements in inventory management, sell-through and mark-downs. At the same time, our logistics business, which completes our end-to-end supply chain solutions, continues to grow its COP by 23.8 per cent, driven by e-logistics, deeper penetration of our core customers supported by cross-selling with our supply chain solutions business and entry to new markets such as India and Vietnam," said Spencer Fung, group CEO of Li & Fung.

"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. 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. This insight, combined with our breadth and depth of experience in global supply chain management, complemented by our extensive network of suppliers, means we can channel production to any market quickly to meet our customers’ requirements, in the face of any potential change in trade and market environments," group chairman William Fung said. (RR)

Fibre2Fashion News Desk – India