Record store closures and bankruptcies in the retail industry dented turnover and profit for supply-chain solutions company Li & Fung.
However the company said the results would have been worse had it not been for market-share gains by some of its key customers.
The company released its results on Friday, along with notice of a takeover proposal which would see the company delisted.
Core operating profit fell by 22.9 per cent to US$228 million, which the company attributed to a 10.1-per-cent decline in turnover to US$11.4 billion. Besides store closures and bankruptcies, a trend of continued destocking by customers and a decision to exit “a number of higher-risk and non-strategic customers” also impacted sales. Net profit attributable to shareholders was US$17 million, representing a return to profitability.
“While our financials were affected by strong headwinds in the retail sector and global markets, we achieved important gains in our goal of creating the Supply Chain of the Future in our recently completed three-year plan,” said Spencer Fung, Group CEO.
“We are successfully transforming from a traditional, analog agent into a unique digital supply-chain service provider. We now have a leadership position in 3D digital product development and are delivering a suite of value-added services to our customers.”
He said the group is continuing to manage the ongoing impact of the US-China trade war, increased complexity of global supply chains and, more recently, the coronavirus pandemic.
“We are working around the clock with our customers and suppliers during this period of deep uncertainty. Our teams on the ground across the world are actively supporting customers, just as we did during the US-China trade war to help address the disruptions to their business.”
Meanwhile, Li & Fung revealed a proposal has been lodged to privatise the company. Subject to shareholder approval, the Fung family, which already has a controlling interest in the group, will partner with Singapore-headquartered logistics warehouse operators and investor Golden Lincoln (GLP) to buy outstanding shares in the business. After the transaction is complete the Fung family will hold 60 per cent of the shares and GLP 40 per cent, with the company delisted from the Hong Kong stock exchange.