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Hong Kong-based global consumer goods exporter Li & Fung Limited has announced robust growth for 2005.
The group’s Three-Year Plan 2005-2007 is off to a good start. The 2005 turnover growth rate was on track to achieve the $10 billion target for 2007. It expects the strong momentum to continue over 2006.
The Group turnover was HK$55.6 billion, 18 percent higher than 2004 and net profit rose by 20 percent to HK$1.8 billion. Earnings per share were 61.2 HK cents, compared against 51.2 HK cents in 2004.
The Board of Directors has proposed a final dividend of 35.5 HK cents per share (2004 final: 30 HK cents). A 1-for-10 bonus issue has also been proposed to commemorate the 100th anniversary of the Li & Fung Group.
William Fung, Group Managing Director of Li & Fung Limited, said, “2005 was the first year of the Group’s current Three-Year Plan, and we are pleased to report satisfactory performance for the year that is in line with the Plan’s targets. The strong increase in turnover indicates that the Group has continued to gain market share in the markets where it operates.”
During 2005, consumer markets faced a chaotic environment of rising interest rates, energy costs, and the removal of the textile quota system. Despite these issues, the Group was able to expand its position amongst existing customers and develop new businesses.
The current Three-Year Plan’s acquisition strategy is also on track with five acquisitions made during 2005, adding to the strength of the results. The Group’s operating profit rose 21 percent to HK$1.9 billion during 2005.
Bruce Rockowitz, President of Li & Fung (Trading) Limited, said, “The removal of the textile quota system during the year created great changes in the sourcing markets, particularly with the subsequent textile safeguards placed on China by the US and the EU. The Group was well prepared for these developments, and during this time our geographically diversified and flexible sourcing network proved invaluable to our customers.”
“The Group will continue to strengthen its presence in markets that are expected to benefit from the new trade regime, particularly South Asia and South East Asia,” he added.
During 2005, the Group launched two more labels under the brand strategy, namely Levis RedTab tops and Royal Velvet. Despite some start-up teething problems during the initial phase, the brands enjoyed positive response from retailers and consumers.
The acquisition of Briefly Stated Holdings Inc, an apparel company in the US with a portfolio of more than 40 character brand licenses, also greatly strengthened the Group’s capabilities and portfolio of brand licenses.
Fung said, “The Group is pleased with its good start to the Plan. We were able to see an accelerated growth rate compared to 2004 in the face of uncertainties brought by the economic environment as well as the dismantling of the textile quota system. We feel that this strong growth momentum is set to continue for 2006.”
“2006 is a special year for the Group as we celebrate the trading business’ 100th year in history. It is increasingly apparent that the Group’s size and leadership position are creating new business opportunities that did not exist before, as we now have the capability to offer complete outsourcing solutions to even very large customers. The trend towards retailers outsourcing their in-house buying functions will continue.”
Fung concluded, “All in all, 2005 was an encouraging start to the Plan, and management remains committed to pursuing the Three-Year Plan targets.”
Li & Fung Limited is the world's leading buying agency for consumer goods, managing the supply chain for retailers and brands worldwide. Headquartered in Hong Kong, the Group services its customer globally through a sourcing network of over 70 offices in 40 countries and territories. |
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