UPDATE 2-Li & Fung warns of 40 pct fall in 2012 profit on restructuring costs
* U.S. unit's business weighed on 2012 profit
* Names new president to head U.S. unit LF USA
* To take necessary steps to improve 2013 results
* Shares down 1.7 pct vs 0.4 pct decline in benchmark
By Donny Kwok
HONG KONG, Jan 11 (Reuters) - Consumer goods exporter Li & Fung Ltd warned of a 40 percent fall in full-year 2012 core operating profit, hit by ongoing restructuring costs and an additional provision tied to its U.S. business for which it appointed a new chief.
The global supply chain manager, whose clients include Wal-Mart Stores Inc and Target Corp, said on Friday that except for its unit LF USA, all other parts of its business had performed as expected.
Li & Fung posted a 24 percent rise in 2011 profit attributable to shareholders to $681.4 million. It is due to release its 2012 results in March.
Shares of the company, which has a market value of $15 billion, ended 1.7 percent lower on Friday, compared to a 0.4 percent decline in the benchmark Hang Seng Index.
With 60 percent of Li & Fung's sales destined for U.S.-based retailers, the company said the turnaround of LF USA's business had been slower than expected, leading to a drop in core operating profit for the first half of 2012.
Last August, the exporter said half-year core operating profit fell 22 percent due to a slower-than-expected turnaround of its U.S operations and weak demand in Europe, though January-June net profit rose by a third as it booked write-backs on two 2010 acquisitions.
Li & Fung is halfway through an ambitious three-year growth plan that aims to boost core operating profit to US$1.5 billion by 2013. Some analysts doubt that target can be met.
The Hong Kong-based company said the ongoing restructuring of LF USA's business includes a reduction in the number of brands distributed in the United States, which had negatively impacted its margins, while its efforts to improve second-half results would not achieve an improvement in core operating profit.
"The group is focused on taking the necessary steps to improve results in 2013, the last year of the current three-year plan," chairman William Fung said in a filing to the Hong Kong bourse.
Li & Fung said it appointed Dow Peter Famulak as the new president of LF USA in December, taking over from Richard Nixon Darling.
- Tweet this
- Share this
- Digg this
- Exclusive - Apple, Google agree to pay over $300 million to settle conspiracy lawsuit
- Brazilian Congress passes Internet bill of rights
- Boy and girl on Korean ferry drowned with life jackets tied together |
- Moyes left all at sea by scale of United job, says former coach
- Ukraine forces kill up to five rebels; Russia starts drill near border |