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24.03.2010 12:54 UPDATE 2-Li & Fung bets on consumer, M&A in 2010; H2 disappoints By Donny Kwok HONG KONG, March 24 (Reuters) - Consumer goods exporter Li&Fung is confident a strong M&A pipeline and a return of consumer demand will underpin its bullish view about 2010, despite disappointing year-end results. The manager of supply chains for retailers including Wal-Mart Stores Inc and Target Corp also forecast a rise in future profitability as it moves further in cutting costs. Strong topline growth should return in 2010 as customer orders increase, president Bruce Rockowitz told reporters in Hong Kong on Wednesday. Core operating margins should improve to more than 4 percent in coming years from 3.82 last year, he added. The company reaffirmed its turnover target of $20 billion for the current year. '2010 will be our best year,' Rockowitz said. Li&Fung faces challenges, however. Consumer demand in the key markets of Europe and the U.S. remains slack, posing challenges for companies whose revenues depend heavily on shoppers in developed markets. How much that will weigh on future results remains to be seen. Li&Fung, though, posted a 67 percent rise in profit for the second half of 2009, largely due to aggressive slashing of costs across the group. Net profit was HK$1.97 billion ($253 million) for July-December, against HK$1.18 billion for the same period in 2008. That lagged a mean profit forecast of HK$2.31 billion, according to Thomson Reuters I/B/E/S. 'The numbers are a little bit disappointing,' said Aaron Fischer, head of Asian consumer research for CLSA. 'Revenues were 8 percent below our forecast.' 'But the outlook is improving. We expect to see decent recovery in (U.S.) retail sales in March.' The company's shares closed down 0.7 percent at HK$41.45 on Wednesday, ahead of the results. They are up 28.5 percent so far this year, handily outpacing the broader market's 3.95 percent decline. THE WAL-MART FACTOR Analysts generally expect to see a transformation this year for Li&Fung as its U.S. customers start to refresh their inventories amid an improving retail environment. The Hong Kong company is also the global sourcing agent for Liz Claiborne Inc. It is also seen benefiting from new outsourcing deals, including a recent one with Wal-Mart, and from contributions made by newly acquired assets, such as UK-based private-label supplier Visage Group. Li&Fung expects to gain a larger share of Wal-Mart's sourcing business, Chairman William Fung said. In January Li&Fung announced that it had struck a $2 billion sourcing agreement with the U.S.-based retail giant. The company may also grow through M&A, particularly in the U.S. and European beauty-care sectors, said CLSA's Fischer. 'We have a lot of deals in the pipeline,' said Rockowitz, adding that the company has a half-billion dollar warchest for M&A. That would add to topline growth, even if this year's consumer spending is weaker than expected. 'They're able to grow in difficult times, through new deals and through acquisitions,' said CLSA's Fischer. Despite the improvements in profitability, some analysts say the company may not be able to meet ambitious growth targets set in its 3-year plan. Li&Fung, which in February said it would buy Visage Group for 173 million pounds ($264.1 million) to expand its European presence, aims to post annual turnover of $20 billion and a core operating profit of $1 billion under its current three-year plan for 2008-2010. (US$1=HK$7.76 yuan) (Editing by Don Durfee and Muralikumar Anantharaman) ((donny.kwok@thomsonreuters.com; +852 2843 6470; Reuters Messaging: donny.kwok.reuters.com@reuters.net)) Keywords: LIFUNG/ (If you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. |
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| aus der Diskussion: | Starker Rebound Li +Fung/ IPO Tochter |
| Autor (Datum des Eintrages): | binda (24.03.10 13:56:26) |
| Beitrag: | 13 von 28 (ID:39205782) |
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