Mar 17, 2016
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HK's Li & Fung 2015 profit down, but beats forecast

Mar 17, 2016

Global exporter Li & Fung Ltd's full-year profit fell 4.6 percent but beat analysts' estimates, as growth in its logistics and vendor support services business helped overcome headwinds from global retail disruption and macro environment.

Li & Fung

The Hong Kong-based company, which grew to prominence by making clothing and toys in Asia for Western retailers, said on Thursday its net profit for the year ended Dec. 31 fell to $421 million from $441 million a year earlier.

That compared with an average forecast of $413.2 million by 10 analysts polled by Reuters.

Li & Fung, which supplies to companies like Kohl's Corp and Wal-Mart Stores Inc, said core operating profit fell 15.2 percent to $512 million.

Revenue fell to $18.8 billion from $19.3 billion a year ago, which was the biggest company by revenue for 2014 in Asia pacific in "Textiles & Apparel" industry.

Textile companies in China are expected to post a 12-month forward revenue growth of 23 percent, the highest expected increase in the Asia-Pacific region in the "Textile & Apparel" sector, according to Thomson Reuters StarMine SmartEstimates, which emphasizes on recent forecasts by top-rated analysts.

Li & Fung has refocused on its core asset-light supply-chain business following the sale of its loss-making brand-licensing and distribution business in 2014, helping it boost free cash flow and better control operating costs.

The company, with a market value of about $5.3 billion, posted a 34 percent rise in January-June profit last year at $149 million.

Analysts were concerned about inventory build-up at retailer level as inventories grew faster than sales growth in recent quarters. They worried that Li & Fung's turnover would be affected as U.S. retailers focus on resolving high inventory levels.

$1 = 7.7606 Hong Kong dollars


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