Li & Fung boost operating profit despite turnover drop

Li & Fung’s revenues dropped by 8.3% in 2017 to $13,534m. On a like-for-like basis, the decrease was 4.6%. The company said its turnover stabilized due to enhanced service offerings by the company.

However, its core operating profit grew 11.8% to $356m. On a like-for-like basis when excluding the impact of the divestment of three product verticals and the 2016 divestment of the Asia consumer and healthcare distribution business, core operating profit increased by 13.3%. Ongoing measures to improve operating efficiency and productivity resulted in an operating cost decrease of 5.8%, it said. Core operating profit as a percentage of turnover increased from 2.2% to 2.6%.

In the Supply Chain Solutions segment, revenues fell 6.2% to $10,989m. Its core operating profit grew 21.2% to $227m.

In Logistics, revenues were 13.3% higher, with core operating profit 23.8% higher. Growth was driven by market share gains and geographical expansion.

Commenting on the 2017 annual results, Spencer Fung, Group CEO of Li & Fung, said “Our new Three-Year Plan had a strong start in its first year and we are on track to meet our financial targets and strategic goals. Customers are embracing our supply chain solutions and digital tools to help them improve the speed of their supply chain, helping them realize tangible improvements in inventory management, sell-through and mark-downs. At the same time, our Logistics business, which completes our end-to-end supply chain solutions, continues to grow its COP by 23.8%, driven by e-logistics, deeper penetration of our core customers supported by cross-selling with our Supply Chain Solutions business and entry to new markets such as India and Vietnam.”

Source: Li & Fung