Hong Kong-based Li & Fung has set out plans to float of its Logistics business, saying this would enable it to accelerate its growth.
The Logistics business saw turnover increase 10.9 per cent to US$543 million for the first half of 2018, while core operating profit was up 15.1 per cent to $38m.
“China continued to lead the way as it benefitted from an upsurge of domestic consumption, especially via e-commerce. The Rest of Asia operations advanced aggressively and new markets including Korea, Japan and India also recorded impressive results.
“The group has decided to seek a separate listing of its Logistics business on the Hong Kong Stock Exchange, and is expected to remain as the controlling shareholder of the Logistics business and continue to consolidate its financial results post spin-off listing.”
Group chief executive Spencer Fung said: “Our Logistics business has grown double digit every year since it became part of Li & Fung at the end of 2010. It continues to benefit from the tailwind of rising middle-class consumption in Asia, e-logistics, geographic and vertical expansions. We have decided to seek a separate listing of our Logistics business to unlock its value and accelerate its growth, while further enhancing our capital structure and financial flexibility.”
Li & Fung focuses on providing supply chain solutions to major brands and retailers. The group reported tough trading conditions in the first half of 2018 as a result of a “challenging macroeconomic and retail environment which saw continued destocking, store closures and bankruptcies”.
The group reported an 18 per cent fall in core operating profit in the first half to $124m. It said this was down to a 9.6 per cent fall in turnover to $5.8 billion and total margin.
Group chairman William Fung said: “With global trade threatened by the US-China trade war, our model of dispersed production in over 50 countries is holding strong. Our breadth and long-term relations in these markets is one of our core competences and strengths in our traditional sourcing business. Additionally, we have accelerated our investment in our digital strategy and we will deliver a fully-integrated digital platform connecting suppliers, customers and other partners with end-to-end visibility and data analytics. This will serve as the nucleus of our future service offering enabling Li & Fung to provide improved, faster supply chain services beyond traditional sourcing.”
