Li & Fung’s interim profit beats estimate, delivering a sterling start to transformation plan
Li& Fung announces new joint venture with South Ocean Knitters
Li & Fung, one of the world’s biggest merchandise sourcing agents and supply chain managers, announced an interim profit that beat an analyst’s estimate, delivering an auspicious start to its three-year transformation plan to recast its business to meet the challenges of e-commerce.
Net profit rose 39.6 per cent to US$101 million in the first six months, beating a US$60 million estimate expected in a Bloomberg survey.
Core operating profit, which excludes interest expense, non-operating and non-recurring items, rose 8.7 per cent to US$170 million. Sales fell 9 per cent to US$7.3 billion during the period, from last year’s US$8 billion.
Li & Fung, founded in 1906, is six months into a three-year plan to reorganise its traditional business as the global middleman for manufacturers to meet the digital age, seeking to remain competitive and relevant while the large retailers that make up its core customers increasingly sell directly to buyers online.
“I am very pleased that our first-half results reflect early success in our three-year plan initiatives,” said Spencer Fung, group chief executive and a great grandson of the company’s founder. “The new supply chain model we are creating is gaining traction and customers are reacting positively.”
The company announced in March this year that it would spend US$150 million between 2017 and 2019 to digitalise its operation “to create the supply chain of the future”.
