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Li & Fung's logistic business rises 3.5% in FY19
20 Mar 20 2 min read
Li & Fung Limited, the world’s leading supply chain solutions partner for brands and retailers, reported its full fiscal 2019 results that ended on December 31, 2019. Company’s core operating profit declined 22.9 per cent to $228 million in the year. However, logistics business delivered top-line growth with 3.5 per cent rise in turnover to $1.2 billion.
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The reduction in core operating profit was reportedly due to reductions in turnover and margin pressure in the supply chain solutions business.
The company reported that its turnover fell 10.1 per cent to $11.4 billion due to continued destocking by customers, store closures and customer bankruptcies. Total margin percentage improved slightly 0.1 percentage points to 10.7 per cent primarily as a result of contribution from the higher-margin logistics business.
Operating costs in FY19 fell 5.3 per cent as a result of productivity gains from the new sourcing and production country platform and other measures, as company reported. Net profit attributable to shareholders was reported $17 million.
The logistics business’s core operating profit rose 1.0 per cent to $94 million. The growth of the logistics business continued to be driven by strong growth momentum in China, e-logistics growth, expanded relationships with core customers in the ASEAN region, and solid results in the new markets of Japan, Korea and India.
“While our financials were affected by strong headwinds in the retail sector and global markets, we achieved important gains in our goal of creating the supply chain of the future in our recently completed three-year plan,” Spencer Fung, Group CEO of Li & Fung, said in a press release. “We are successfully transforming from a traditional, analog agent into a unique digital supply chain service provider.”
Building on its strong foundation, Li & Fung reported that in FY20 it intends to leverage its combined supply chain solutions, logistics and onshore wholesale businesses with its digital applications to provide differentiated end-to-end supply chain services that is unique in the industry.
With operational excellence at its core, the company in it’s strategic direction for 2020 includes Li & Fung’s existing strategies in account management business development and vendor management, as well as leveraging its scale and scope to drive competitive advantage with newly established centers of excellence in denim, costing and fabric.
Fibre2Fashion News Desk (JL)
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