Mar 24, 2011
Li & Fung '10 net at record but lags f'casts, eyes higher profit
Mar 24, 2011
March 24 - Consumer goods exporter Li & Fung posted a record profit for 2010 and set an ambitious plan for the coming three-years to actively expand its sourcing network to rake in higher profits.
The manager of supply chains for retailers including Wal-Mart Stores Inc and Target Corp faced challenges over the past few years as consumer demand in the key markets of Europe and the U.S. remained slack for the most part.
But U.S. consumer demand started recovering late last year, providing a boost to its results.
For 2010, the company posted a record net profit of HK$4.28 billion, lower than a consensus forecast of HK$5.03 billion, but higher than HK$3.37 billion for 2009.
For the July-December period, Li & Fung's net profit hit HK$2.11 billion ($270 million) as per Reuters' calculation based on the full-year earnings figures.
That compared with HK$1.97 billion for the same period in 2009 but lagged a mean profit forecast of HK$2.86 billion, according to Thomson Reuters I/B/E/S.
Li & Fung unveiled its new three-year plan in the earnings statement, aiming to achieve core operating profit of $1.5 billion by 2013, 50 percent higher than the $1 billion in the previous three-year plan.
"We expect that the European onshore business will track the development pattern of U.S. onshore business very closely and actively grow via acquisition during this plan period," the company said in a filing to the Hong Kong stock exchange.
Analysts had expected that a number of businesses Li & Fung bought lately, such as UK-based private-label supplier Visage Group and Jimlar Corp, would contribute to sales and earnings in second half of 2010.
They also see the exporter's $1 billion war chest for acquisitions driving earnings growth in the next two years.
The company's shares closed down 0.23 percent at HK$42.95 on Thursday, ahead of the results. They are down 3.8 percent so far this year, against the broader market's 0.06 percent decline.
(Reporting by Donny Kwok and Michelle Chen; Editing by Muralikumar Anantharaman and Ken Wills)
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