* U.S. unit's business weighed on 2012 profit
* Names new president to head U.S. unit LF USA
* To take necessary steps to improve 2013 results
* Shares down 1.7 pct vs 0.4 pct decline in benchmark
By Donny Kwok
HONG KONG, Jan 11 Consumer goods exporter Li &
Fung Ltd warned of a 40 percent fall in full-year 2012
core operating profit, hit by ongoing restructuring costs and an
additional provision tied to its U.S. business for which it
appointed a new chief.
The global supply chain manager, whose clients include
Wal-Mart Stores Inc and Target Corp, said on
Friday that except for its unit LF USA, all other parts of its
business had performed as expected.
Li & Fung posted a 24 percent rise in 2011 profit
attributable to shareholders to $681.4 million. It is due to
release its 2012 results in March.
Shares of the company, which has a market value of $15
billion, ended 1.7 percent lower on Friday, compared to a 0.4
percent decline in the benchmark Hang Seng Index.
With 60 percent of Li & Fung's sales destined for U.S.-based
retailers, the company said the turnaround of LF USA's business
had been slower than expected, leading to a drop in core
operating profit for the first half of 2012.
Last August, the exporter said half-year core operating
profit fell 22 percent due to a slower-than-expected turnaround
of its U.S operations and weak demand in Europe, though
January-June net profit rose by a third as it booked write-backs
on two 2010 acquisitions.
Li & Fung is halfway through an ambitious three-year growth
plan that aims to boost core operating profit to US$1.5 billion
by 2013. Some analysts doubt that target can be met.
The Hong Kong-based company said the ongoing restructuring
of LF USA's business includes a reduction in the number of
brands distributed in the United States, which had negatively
impacted its margins, while its efforts to improve second-half
results would not achieve an improvement in core operating
"The group is focused on taking the necessary steps to
improve results in 2013, the last year of the current three-year
plan," chairman William Fung said in a filing to the Hong Kong
Li & Fung said it appointed Dow Peter Famulak as the new
president of LF USA in December, taking over from Richard Nixon