Li & Fung has announced that it witnessed a 23 per cent fall in its core operating profit in 2019.
While announcing its annual results for the year, the company informed that its directors have received a proposal to privatise the firm.
Singapore-based GLP Group has offered US $ 928 million to privatise Li & Fung at a price premium of around 150 per cent.
Li & Fung is a Hong Kong-based global sourcing and logistics group that works as a supply chain manager primarily for brand and retailers of US and EU. Bangladesh, Vietnam and China are the biggest supplier countries for Li & Fung as they contribute 99, 91 and 51 per cent, respectively (as far as soft goods are concerned)
“The company’s financial performance was affected by the multi-year trend of destocking and customer turnover as well as record store closures and bankruptcies in the retail industry,” it said in a statement.
The turnover of the company was US $ 11,413 million in 2019, 10.1 per cent down compared to US $ 12,701 million in 2018, though the operating costs decreased by 5.3 per cent to US $ 992 million.
It is pertinent to mention here that supply chain solutions (SCS) business is the largest revenue generator for the Group and accounted for 77 per cent of turnover in 2019. SCS business was also 11.1 per cent down in 2019.
More on this, the company added “In 2019, the multi-year destocking trend and store closures in retail industry persisted, negatively affecting turnover. Turnover was also impacted by decisions made by certain customers in earlier years to establish their own buying offices. Soft goods accounted for 74 per cent of turnover, and hard goods accounted for 26 per cent.”
The logistic business of the company increased 3.5 per cent; the total manpower costs for the company in 2019 were US $ 654 million compared with US $ 711 million in 2018. “COVID-19 will cause major uncertainty for 2020 and beyond,” the company added.
