Li Ning says 2020 will be more profitable, even as coronavirus pandemic defers Tokyo Olympics and keeps shoppers away
- Li Ning says it’s on track to increase its 2020 profit margin by 1.4 percentage point to 10.5 per cent, helped by cost cuts
- The company has had a bumper year in 2019, where revenue and net income beat estimates
The Beijing-based producer of sports shoes and apparel forecasted a 2020 profit margin of 10.5 per cent on the back of a bumper year in 2019, during which revenue beat estimates and rose 32 per cent to 13.9 billion yuan, while net income more than doubled to 1.5 billion yuan on the back of a one-time profit. Li Ning’s shares jumped by 19 per cent before earnings were announced to an intraday high of HK$23.85 in Hong Kong.
“We have prepared many products and arrangements for the Tokyo Olympics, but we have swiftly adjust our input on that and the impact is under control,” said Kosaka, a Chinese-Japanese also known as Wei Qian. “We see impact, more or less, on our business following the postponement or cancellation of major sports, as [event endorsements] has always been an important driver of our business, but it is not the sole driver.”
Li Ning has gone through a turnaround in the past few years, as it slashed cost and trimmed its overflowing product line to compete with its much larger rivals. Li Ning – founded by China’s 1989 Olympic gold medallist gymnast – has gone about on its restructuring. Revenue last year grew at double the pace of 2018, while net income tripled the previous year’s after a one-time gain. Net profit attributable to shareholders, after excluding a one-time profit not related to operation, rose 77 per cent to 1.3 billion yuan in 2019, according to results filed to the Hong Kong stock exchange.
The company plans to hand out a final dividend of 15.47 HK cents per share, up from 8.78 HK cents in 2018.
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