* H1 net profit $111 mln Vs $96 mln year-ago
* Core operating profit below analysts' estimates
* Cautious outlook as customers delay order decisions
By Donny Kwok
HONG KONG, Aug 21 Hong Kong's Li & Fung Ltd
, which grew to prominence making clothing and toys in
Asia for Western retailers, said its first-half profit climbed
16 percent as a one-off accounting gain more than offset weak
sales in overseas markets.
Li & Fung, which supplies companies like Kohl's Corp
and Wal-Mart Stores Inc, said January-June net profit
grew to $111 million from $96 million a year earlier. But it
sounded a cautious note on Thursday, saying customers are
delaying order decisions until they get a better idea about the
outlook for consumer confidence in the third quarter.
The firm said first-half earnings were boosted by a one-time
$98 million gain related to the way it accounted for
acquisitions. Li & Fung has traditionally relied on acquisitions
to fuel growth, but the company has slowed the pace of mergers
and acquisitions and spun off Global Brands Group Holding Ltd
, a business that makes branded goods under licence.
Core operating profit fell 9 percent in the half to $227
million, slightly below an average forecast of $232 million from
three analysts polled by Reuters.
"The recent Russia and Ukraine crisis has reduced foreign
travel by Russian nationals, which is starting to impact the
European retail markets favoured by Russian tourists," chairman
William Fung said in a statement.
"In China, which remains Asia's most important economy, the
government's focus on fighting corruption and its pull-back on
being an export-driven economy is impacting consumption in the
short term," Fung said, adding that the firm still sees
opportunities over the long term.
The global exporter had said in May that factory facilities
of some suppliers in Vietnam, which accounted for 7 percent of
sourcing last year, had been damaged during anti-China protests
earlier this year and that the disruption caused would mainly
affect clients in the United States.
Li & Fung, with a market value of over $11 billion, listed
Global Brands on the Hong Kong bourse in July without raising
capital, as part of a three-year growth strategy.
Global Brands, which carries names including Cole Haan,
Tommy Hilfiger, Disney, Calvin Klein and Juicy Couture,
separately on Thursday reported its first-half net loss widened
to $98 million from $49 million a year earlier as costs rose on
investment in developing new licences.
Shares of Li & Fung have risen more than 26 percent so far
this year, outperforming a 7.8 percent rise in the benchmark
Hang Seng Index.
(1 US dollar = 7.7508 Hong Kong dollar)
(Editing by Kenneth Maxwell)