Li & Fung Records $375 Million Yearly Net Loss
Its main supply chain business was still soft, but the company has a fast-growing logistics arm.
HONG KONG — Global sourcing firm Li & Fung, looking leaner after it moved to shed several product verticals, recorded a net loss of $375 million for the year ended Dec. 31.
That compared to a net profit of $221 million in 2016.
On a like-for-like basis, excluding the impact of the divestment of its furniture, sweaters and beauty business, and the 2016 divestment of the Asia consumer and healthcare distribution business, core operating profit increased by 13.3 percent to $356 million.
The company which works with 15,000 suppliers in over 40 markets, saw group turnover decrease by 8.3 percent to $13.5 billion dragged down by several customers who experienced bankruptcies within the last year.
The group’s supply chain solutions division, accounting for 81 percent of turnover for its continuing operations, stabilized throughout the year although still decreasing of 6.2 percent from a year ago to $11 billion. A high number of store closures in the U.S., its biggest market, weighed the segment down and customers remained conservative on their orders--skewing towards smaller orders with shorter lead times.
The logistics side proved better with turnover growing 13.3 percent to $1.03 billion. The firm recently ventured into India and Vietnam, steadily expanding its footprint, and is set to open a second Singapore warehouse facility after higher than anticipated demand.
Its onshore wholesale division fell 2.4 percent to $1.6 billion, which the company said stemmed from an overall “anemic consumer sentiment” especially in Europe.
Chief executive officer Spencer Fung said the firm was “on track” to meet financial targets and goals as laid out in its three-year plan, among which include digitizing the entire supply chain by 2019 and increase speed to market.
“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,” he said.
Li & Fung declared a conditional special dividend of 47.6 Hong Kong cents per share and a final dividend of 2 Hong Kong cents per share.