Li & Fung Limited, the world’s leading supply chain solutions partner for brands and retailers, has announced its interim results for the 6 months ended 30 June 2019.
The results distinctly state that the group turnover has declined by 8.4 per cent to US $ 5,356 million mainly owing to ongoing destocking, customer turnover and customer bankruptcies as brands and retailers continued to face pressure on sales and margins.
However, the company has said that it is stabilising as a result of improvement in operations and customer engagement. Total margin as a percentage of turnover was 10.9 per cent in the first half.
Notably, the company’s core operating profit slumped by 18.6 per cent to US $ 105 million due to a decrease in turnover and total margin in the supply chain solutions business, but net profit swung back to positive US $ 21 million compared to a loss of US $ 86 million in 2018.
With over 230 offices across key production markets globally, the Hong Kong-based Li & Fung is working with several top textile and apparel companies in India like Shahi Exports, Welspun and many more. India is the third largest sourcing destination for Li & Fung.
The company believes that the complex global trading environment presents the biggest opportunity for Li & Fung’s business model in 20 years.
“The new management team has been focused on restructuring the company and all operational KPIs are now improving for both our customers and suppliers. We are starting to gain momentum and winning market share and new customers due to our operational excellence, globally diversified network and 3D virtual design services. As a result, turnover decline is stabilising and beginning to bottom out,” said Spencer Fung, Group CEO, Li & Fung.
“We are facing increasing geo-economic instability and uncertainty. Regardless of other factors, the acceleration of the migration of production out of China will continue given China’s upgrading of its industrial base from a manufacturing exporter to a high-technology service provider. With Li & Fung’s long history, we appreciate that there is constant fluctuation in global trade. That is why we continued to maintain a well-diversified sourcing network spanning more than 50 economies and avoided over-reliance on any single market, even when the environment appeared benign. This continues to be the right approach. Our ability to leverage this extensive network puts Li & Fung in the best position to help our customers optimise their sourcing and production and minimise tariff impact…,” said William Fung, Group Chairman.