• Profit attributable to shareholders up 33.4% to US$149m
  • Margin flat at 11.4%
  • Sales drop 1% to $8.63bn
Li & Fung said results reflect the ongoing weak macroeconomic conditions

Li & Fung said results reflect the ongoing weak macroeconomic conditions

Li & Fung has revealed first-half results reflecting the ongoing weak macroeconomic conditions in its key markets, reporting lower first-half sales in the US and Europe.

The sourcing giant posted a profit attributable to shareholders of US$149m, an increase of 33.4% on last year, thanks to the spin-off of Global Brands' operations in 2014.

Core operating profit, however, slumped 19.7% to $182m from $227m a year earlier, impacted by the annualisation of operating costs associated with investments.

Total turnover had a slight decrease of 1% to $8.63bn as a result of a 2.5% fall in the trading business. The firm's logistics business, however, continued its high growth trajectory with turnover increasing by 36.3%.

Customers are being affected by a subdued macroeconomic and retail environment, as well as turnover decline in Europe due to currency depreciation. In the US, sales were flat, while Europe fell 13%. Turnover in Asia grew 14% and the rest of the world decreased by 9%.

Margins also continued to remain under pressure, remaining unmoved at 11.4%. The overall performance, however, was in line with company expectations.

“Despite challenging macroeconomic conditions, turnover remained steady in the first half of 2015 and business with our core customers grew,” said chairman William Fung. “The foundation of our business remains solid. We are happy with the continued strong growth in our logistics business. The Vendor Support Services business announced in 2014, is ahead of plan. Hence, we are pleased to see that our investments made for this three-year plan have begun to yield benefits.”

The company said it is confident that, through the remainder of the year, key prospects will be converted into new business.

CEO Spencer Fung added: “Looking at the larger picture it is important to note that we are currently in a period of transition as a company. We continue to invest for the long term to achieve our goals of building a sustainable enterprise and helping our customers grow their business at a time when they are requiring and demanding more to help them stay competitive.”