Li and Fung H1 Profits Decline Despite Strong Revenue Gains

Li & Fung Limited posted strong revenue growth for the first six months of 2011. The increase reflects the continuing expansion of its market share through both organic growth and acquisitions.

For the first six months ending 30 June 2011, the Group’s revenue was $8.80 billion, 33 percent higher than same period in 2010. Growth impetus came from all three business Networks of Trading, Logistics and Distribution.

Compared to the same period last year, revenue growth from Trading Network and Distribution Network was 18 percent and 85 percent respectively.

Core Operating Profit down by 16 percent to $282 million, due to higher operating expenses arising from investing in the Group’s new Three-Year Plan and recent acquisitions.

The Group reported profit attributable to shareholders of $236 million, a decrease of 15 percent over the same period in 2010. Basic earnings per share was 2.92 US cents, a decrease of 21 percent compared to 3.69 US cents during the same period in 2010.

The Board of Directors has proposed an interim dividend of 19 HK cents per share (2010 interim: 19 HK cents, adjusted for the effect of Share Subdivision in May 2011).

Mr. William K Fung, Executive Deputy Chairman of Li & Fung Limited said, “During the past three years we have come through one of the worst recessions in our export markets but we continued to gain market share and increased our top line through acquisitions and from organic growth”.   

“While recent acquisitions  and investing in the new Three-Year Plan have contributed to higher operating costs, resulting in a lower profit for the first six months of this year, we remain disciplined as always in cost management and continue to implement our cost control initiatives, the benefits of which will keep us on track for the year and we are confident of meeting our target of $1.5 billion in core operating profit by 2013.”

Mr. Bruce Rockowitz, Group President and CEO of Li & Fung Limited, said, “We expect the gains from streamlining and cost reductions to have a positive impact on our full year results.”

“Furthermore, the integration of our three business Networks is progressing well, and we are realizing encouraging results from cross-selling opportunities,” he observed.

“The acquisitions we made and are making are allowing us to enter or expand in new niche markets such as costume jewelry, footwear, teenage casual clothing, boy’s and young men’s sportswear whose growth prospects are significant,” Mr. Rockowitz added.