Li & Fung expects more solid growth as profit rises 26pc
Acquisitions propel 22pc gain in turnover to HK$68b and towards target of US$10b by end of the year
Consumer goods exporter Li & Fung said it continued to see robust growth this year after reporting a 26 per cent rise in full-year profit from recurring operations to HK$2.34 billion.
Attributable profit, including a HK$71.79 million gain from property sales, jumped 23 per cent to HK$2.2 billion last year from HK$1.79 billion in 2005. Thomson First Call's consensus forecast was for net profit of HK$2.34 billion. Earnings per share climbed 21 per cent to 67.1 HK cents.
Turnover, helped by contributions from newly acquired units, jumped 22 per cent to HK$68.01 billion, bringing it closer to the company's target of US$10 billion by the end of this year.
'The results were strong last year,' managing director William Fung Kwok-lun said.
'The trend continues to be promising based on orders on hand until June or July, or the back-to-school period, despite lots of talk about a possible recession [in the United States].'
Li & Fung serves as a barometer of global economies due to the wide range of goods, from clothing and shoes to toys and home appliances, that it sources from developing countries and exports to economies such as the US and Europe.
The US generated 72 per cent of turnover last year, compared with 18 per cent from Europe, with the rest from Canada, Central and Latin America, Australasia and Japan.
Mr Fung said the reliance on the US market would be reduced this year to about 65 per cent and the contribution from Europe would rise to 25 per cent as a result of two recently acquired sourcing operations.
The group paid Euro60 million (HK$623 million) for the sourcing unit of KarstadtQuelle, Europe's largest department store and mail order group, in October last year and US$248 million for the global sourcing division of fashion label Tommy Hilfiger last month.
Acquisitions made in previous years contributed to 7 per cent of the 23 per cent increase in turnover last year and the shopping spree showed no signs of abating, Mr Fung said.
'The Tommy deal is not the last deal for this year,' he said, while declining to give specifics on opportunities under consideration.
The group's cash resources stood at HK$3.3 billion at the end of December.
Li & Fung's average selling price was flat last year, despite rising labour costs in its key sourcing origin - the mainland - and a stronger yuan. The company forecast slight inflation this year. 'The trend is not downwards anymore,' executive director Bruce Rockowitz said.
The final dividend was raised 21 per cent to 39 HK cents per share, taking the full-year payout up 21 per cent to 55 HK cents per share.
The stock closed up 0.74 per cent yesterday at HK$27.15 before the results announcement.
