The new Three-Year Plan ‘Building the Supply Chain of the Future’ represents the company’s continuing business transformation with the goal of creating the supply chain of the future, helping its customers navigate the digital economy.
“We aim to create the supply chain of the future and help our customers navigate the digital economy with a focus on speed, innovation, and digitalisation. Our ability to operate with agility is a key part of our strategy and becomes even more important as we transform the way we do business and drive growth. Openly collaborating in new ways of working and developing new value-added services is a key part of our innovation strategy. Creating end-to-end digital supply chains will bring data-driven insight for our partners, help us make faster decisions and create better solutions for our customers,” said Spencer Fung, Group chief executive officer of Li & Fung.
As a continuation of its drive to simplify the business, and an immediate first step in the implementation of the new Three-Year Plan, the company announced it will be reorganised into two major divisions, focused on services (supply chain solutions and the logistics solutions) and products (three product verticals and onshore wholesale businesses), each with a strategic focus and a distinct management team.
For the full year 2016, the company reported resilient results against a challenging macroeconomic environment and ongoing disruption at retail. Excluding the impact from the strategic divestment of the Asia consumer and healthcare distribution business in June 2016, total turnover decreased by 8.3 per cent to $16.2 billion on a like-for-like basis. Reported 2016 total turnover decreased by 11 per cent to $16.8 billion.
Sustained efforts to improve operating efficiency and productivity through the use of technology and streamlining of the cost base reduced operating costs. Core operating profit decreased 17.7 per cent to $408 million on a like-for-like basis. Turnover from the trading network continued to be affected by a reduction in order volume, deflation and relative currency weaknesses against the US dollar and declined by 8.7 per cent on a like-for-like basis. However, in the logistics network, the company continued to grow profits organically through increased market share with existing customers, new customer contracts, and geographic expansion.
Commenting on the future outlook, William Fung, Group chairman of Li & Fung, said, “While geopolitical and economic realities are in flux, this uncertain environment also presents opportunities for Li & Fung. Our breadth and depth of experience in global supply chain management, gained over 110 years, together with our extensive global network of vendors will be a competitive advantage.” (RKS)
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