Improved efficiency and productivity led Li & Fung to a 21.8% increase in operating profit in the services segment of its core supply chain solutions business in 2017 as it revealed a strong start to its current three-year plan.
The global sourcing specialist said its strategy of creating the “supply chain of the future” is on-track to deliver its financial and strategic goals, with customers responding well to its speed and digital supply chain model, realising tangible improvements in their inventory management, increased sell-through and reduced markdowns.
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The results boosted core operating profit for the group by 13.3% to US$356m on a like-for-like basis, excluding the impact of the divestment of three product verticals and 2016 divestment of its Asia consumer and healthcare distribution business. Core operating profit as a percentage of turnover increased from 2.2% to 2.6% for the year ended 31 December.
Total margin increased from 9.9% to 10.2%, while turnover fell 4.6% to $13.5bn as a result of customers’ de-stocking and lower prices. Several customers also went bankrupt.
“Our new three-year plan had a strong start in its first year and we are on track to meet our financial targets and strategic goals,” says Spencer Fung, group CEO. “Customers are embracing our supply chain solutions and digital tools to help them improve the speed of their supply chain, helping them realise tangible improvements in inventory management, sell-through and markdowns.
“At the same time, our logistics business, which completes our end-to-end supply chain solutions, continues to grow its COP by 23.8%, driven by e-logistics, deeper penetration of our core customers supported by cross-selling with our Supply Chain Solutions business and entry to new markets such as India and Vietnam.”
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By GlobalDataLast month Li & Fung bolstered its top team with appointment of Valerie Lavion as head of its childrenswear platform and department stores in North America, a move aimed at building stronger relationships with its suppliers and accelerating efforts to drive speed and innovation.
Li & Fung looks to build supplier relationships with Lavion appointment
