Li Ning posted its first loss since going public in 2004 in 2012, as revenue tumbled 36.9 percent to RMB6.74 billion ($1.07 bb).

 
Chinas largest domestic sporting goods company reported an operating loss of RMB1.59 billion ($252 mm), marking a huge swing from last years profit of RMB631 million. Net loss attributable to shareholders reach RMB1.98 billion ($319 mm), greatly exceeding analysts expectations, which called for a loss of RMB 1.4 billion.
Gross margin fell 750 basis points to 37.8 percent, while operating profit margin plummeted 3,370 basis points to a negative 29.4 percent. As sales fell, staff costs increased 220 basis points to 10.9 percent of net sales.
 
Li Ning was among several Chinese sporting goods companies that focused on liquidating bloated inventories, shutting hundreds of retail outlets, writing down accounts receivable and restructuring in 2012 as Nike, Adidas and other global brands expanded their presence in China in the wake of the 2008 Summer Olympics in Beijing.  It appears much work remains to be done in 2013, as the company average trade receivables turnover increased 21 days to 97 and it added 20 days to its cash conversion cycle. Li Ning earned 97.6 percent of its revenue from the Chinese market in 2012.
 
The company ended the year with RMB 1.45 billion in bank borrowings, up 72.7 percent and a debt to asset ratio of 70 percent, up 2,000 points from Dec. 31, 2011.