HONG KONG: Li & Fung reports "solid" H1 but warns on US
- Q2 profit up 11.4%
- Gross margin narrows to 11.4%
- Total sales up 3%
The US continues to be Li & Fung's key export market
Global sourcing firm Li & Fung reported "solid" results in the first half, against a mixed economic landscape, with growth in both sales and earnings.
Profit attributable to shareholders increased by 45% to US$210m in the six month period. This included a non-cash gain of $98m on the write-backs of contingent considerations.
Gross margin narrowed to 11.4% from 11.6% a year earlier, but sales were up 3% to $8.71bn, driven by growth in the firm's trading business and a 44% sales increase in the logistics business.
Geographically, the US continued to be the group's key export market, representing 60% of total turnover and up slightly from 59.6% in the same period last year. US turnover grew by 3.5%, driven by the strong growth in retail sales of key customers in home furniture and kids wear. In Europe, sales were up 4.2%.
Rest of world accounted for 21.8% of total turnover, versus 22.4% in first half 2013. Asia accounted for 13.6% of total sales, slightly down from 14.3% in the same period last year. China alone accounted for 7.8% against 8.2% last year. This was mainly due slower growth in the wholesale business in the first half, but was offset by new customer wins in its trading business and the contribution of it freight-forwarding acquisition.
"The first half of 2014 was characterised by a general weakness in retail sales and uncertain political and macroeconomic conditions," the company said. "The outlook of our key markets, US and Europe, continues to be uncertain and we expect market conditions to remain challenging."
An interactive databank with intelligence on the major apparel sourcing countries
For our annual briefing on apparel industry issues to watch in the year ahead, just-style has again asked leading executives for their feedback on the challenges and opportunities likely to emerge in ...
The most-read stories on just-style this week include news that Myanmar garment makers are mulling possible shut-downs after the introduction of the sector's first minimum wage, a look at why US appar...
The International Labour Organization (ILO) and the Netherlands have embarked on a joint initiative to strengthen labour inspection systems in Pakistan....
- How M&S plans to revamp its clothing business
- The difference between compliance and safety?
- Footwear to see "significant" gains from TPP
- Yarn-forward rules weigh on Vietnam TPP potential
- UK retailers key to domestic manufacturing growth
- Gap accused of rights violations in supply chain
- US Q1 in brief – Guess, Burlington Stores, Sears
- M&S to see "departure" of sourcing chiefs?
- Adidas Speedfactory eyes large-scale production
- H&M, Inditex and Nike rated supply chain leaders