Although logistics division sales expanded by a massive 66 per cent, overall sales at Li & Fung rose marginally by just 1.4 per cent for the period ended December 31, 2014.
Li & Fung said total sales grew 1.4 per cent to US $19,288 million and revenue in Logistics increased by 66 per cent, while sales in the Trading business was stable.
Following the spin-off of Global Brands in July 2014, the Company restated its financials and has reclassified Global Brands as discontinued operations.
The discussion of results and financial position does not therefore include contribution from Global Brands for the year-ended both December 31, 2013 and December 31, 2014.
“Total margin decreased by 2.2 per cent due to an overall reduction in margin across the supply chain as a result of brands and retailers conducting heavy promotional sales,” Li & Fung said in a press release.
“In addition, total margin was also impacted negatively by the shift in the mix of our business from principal to the lower margin agency business,” it added.
The company made investments to strengthen and improve its core business aligned to its three-year plan goals of building a sustainable enterprise, simplifying the business and accelerating organic growth.
Strategic areas of investment included strengthening the logistics network and also adding significant freight forwarding capabilities through the China Container Line (CCL) acquisition.
The Company also made investments in setting up the new Vendor Support Services unit which will gain traction in the coming years.
Further investments included new talent and expertise, presence in new markets, new product categories, and support infrastructure to drive organic growth in the business over the coming years.
Excluding the result of Global Brands, profit attributable to shareholders decreased by 12 per cent to US $539 million.
Basic earnings per share in 2014 were 6.46 US cents, down from 7.32 cents in 2013 and Li & Fung has proposed a final dividend of 2.69 cents per share, and a special dividend of 0.90 cents per share.
“The successful spin-off of Global Brands has allowed us to focus on ways to create value for our customers across our core businesses of Trading and Logistics,” said Spencer Fung, Group CEO.
Spencer Fung continued, “As we enter into 2015, we remain focused on executing our growth strategies with the added benefit of a simpler and more nimble operating model.
“We are committed to creating value for our customers and developing key product expertise to position us for future opportunities.”
