Li & Fung, the Hong Kong based supply chain solutions partner for brands and retailers, has reported an 18.6 per cent fall in core operating profit for the first half of 2019.
It said the reduction in profit was down to a decrease in turnover and total margin in the Supply Chain Solutions business coupled with continued investment in digitalization in line with the Company’s long-term plan.
Group turnover decreased 8.4 per cent to US$5,356 million, while core operating profit decreased 18.6 per cent to US$105 million.
The group’s Logistics business continued its profitable growth momentum in the first six months of 2019. In-country logistics services had strong top-line and bottom-line double-digit growth. China continued to lead the way, supported by an upsurge of domestic consumption, especially via e-commerce for which LF Logistics enjoyed first-mover advantage due to its early investment in e-logistics.
Group chairman William Fung said: “We are facing increasing geo-economic instability and uncertainty. Regardless of other factors, the acceleration of the migration of production out of China will continue given China’s upgrading of its industrial base from a manufacturing exporter to a high-technology service provider.
“With Li & Fung’s long history, we appreciate that there is constant fluctuation in global trade. That is why we continued to maintain a well-diversified sourcing network spanning more than 50 economies and avoided over-reliance on any single market, even when the environment appeared benign. This continues to be the right approach. Our ability to leverage this extensive network puts Li & Fung in the best position to help our customers optimize their sourcing and production and minimize tariff impact. The proliferation of bilateral free trade agreements has become the new norm, and this presents Li & Fung with opportunities not seen for the past 20 years.”