First-half net profit at sourcing giant Li & Fung beats analysts’ forecasts
Li & Fung, the Hong Kong sourcing company that supplies clothes and toys to overseas retailers including Wal-Mart, reported a better-than-expected profit decline in the first half, thanks to reduced operating costs amid a deflationary environment and reduced orders.
First-half net profit fell to US$72 million from US$149 million a year earlier, beating an average forecast of US$68 million, based on the mean forecast of 13 analysts in a Bloomberg poll. Basic earnings per share fell to 6.7 HK cents. The company proposed an interim dividend of 11 HK cents per share, down from 13 HK cents a year earlier.
“The first six months of the year was the toughest retail and trading period we have operated in since the global financial crisis in 2008,” chief executive Spencer Fung said at a briefing on Thursday. “We expect the trend to continue in the second half and the amount of orders will remain at the level in the first half ... we will focus on our core customers.”
The company’s core operating profit for the first half declined 14.2 per cent to US$156 million, as that of trading business slid 19.1 per cent to US$129 million, despite a 20.8 per cent rise in its logistics business.
Total revenue dropped 6.4 per cent to US$8.07 billion from US$8.63 billion in the first half of 2015, compared with analyst estimates of US$8.45 billion.
The first six months of the year was the toughest retail and trading period we have operated in since the global financial crisis in 2008
Operating cost fell 2.8 per cent to US$779 million thanks to improved efficiency.