HONG KONG: Li & Fung warns of 40% slump in FY profit
Global sourcing giant Li & Fung Ltd today (11 January) warned of a 40% fall in full-year core operating profit - and named a new president to lead its US unit where sales and margins have weakened.
The company, which supplies clothing and toys to the world's largest retailers, said operating income slumped 40% in 2012 due to ongoing restructuring costs and additional provisions associated with LF USA's business.
Except for LF USA, all other parts of the group's business performed as expected, it added.
Li & Fung in August said the turnaround of its US business had been slower than expected, and that this had contributed to a decrease in core operating profit.
But the Hong Kong based company now says that a "reduction in the number of brands distributed in the USA" hurt margins in the year ended 31 December.
It added that profit attributable to shareholders is unlikely to exceed the US$681.4m reached in 2011.
As part of efforts to restructure its US operations, it has appointed Dow Peter Famulak as the new president of LF USA, responsible for the management of the unit's day-to-day operations.
He takes over from Richard Nixon Darling, who has assumed a non-operating role in the Group.
"With this management change, the Group expects to successfully complete its LF USA restructuring project in 2013 which includes a reduction in the number of brands for distribution in the US," a statement said.
The company will release its full-year results in March.
But it says it remains committed to its target of $1.5bn in core operating profit by 2013, as envisaged in its current three-year plan.
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