Hong Kong-based multinational Li & Fung Limited, the global consumer goods exporter, today announced record profits for 2009, which was driven by its discipline in cost control amidst a soft consumer market. For the year ended 31 December 2009, the Group’s turnover was HKD104,479 million (USD13,395 million), 6% lower than the year before, reflecting sluggish markets, a number of customer insolvencies and the current tactic of many other customers to maintain tight inventory levels.
At the same time, Li & Fung’s core operating profit increased by 29% to HK$3,990 million, largely due to the Group’s cost-controlling efforts and contributions from its higher-margin onshore businesses. Profit attributable to shareholders reached HK$3,369 million, an increase of 39% compared to 2008. Results for both core operating profit and profit attributable to shareholders represented record highs. Basic earnings per share were 91.0 HK cents, an increase of 31% compared to 69.3 HK cents in 2008. The Board of Directors has proposed a final dividend of 49 HK cents per share (2008: 33 HK cents).
Mr. William K Fung, Group Managing Director of Li & Fung Limited, said, “We concluded the year with a strong performance in which we delivered not only operating leverage, but also a strong bottom-line. The Group’s focus on operating leverage and cost control in the last 12-18 months has enabled us to drive greater profits despite a challenging consumer market. We are confident about 2010 and our ability to capture more market share in this environment.”
“During the year we also strengthened our sourcing capabilities in Europe, Middle East, Northern Africa, and the former Soviet Union republics through the opening of our new 7,100 sq. metre European hub operations in Istanbul, Turkey” said Mr. Fung. He added: “Our 80 offices around the world are now sourcing in more than 40 economies to ensure we deliver the most competitive solution to our customers.”
Mr. Bruce Rockowitz, President of Li & Fung (Trading) Limited, said, “We completed a number of landmark outsourcing deals in 2009, including Liz Claiborne Inc., Talbots, Inc. and Hudson’s Bay Trading Company. We have also seen an increasing number of leading retail groups consolidating and aligning their global sourcing needs by partnering with us to leverage our
scale and expertise.
“On the acquisition front, we made three roll-up acquisitions (JMI, Shubiz Ltd. and Clearskies Ltd.) and one large acquisition (Wear Me Apparel, LLC) in 2009. Now we are seeing this momentum carry into this year with the sourcing arrangement with Wal-Mart Stores, Inc. and the acquisition of Visage Group Ltd. in the first quarter. These deals will further solidify our market share in their respective areas and contribute positively to our bottom-line for years to come. Furthermore, the pipeline of deals remains very strong, and many of them focus on the high-potential health and beauty, footwear and European onshore businesses.”
Mr. Rockowitz continued, “This year is also the last year of the current Three-Year Plan 2008-2010. While our turnover target of US$20 billion and core operating profit target of US$1 billion seem challenging at present, we remain committed to them.”
(Source: Li & Fung Limited)