Li & Fung sees onshore revenues meeting targets
today May 18, 2010
HONG KONG, May 18 (Reuters) - Consumer goods exporter Li & Fung (0494.HK) said on Tuesday 18 May revenues from its onshore businesses in the U.S. and Europe were set to reach a total $4 billion in 2010, meeting its three-year target.
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The consumer goods exporter, which supplies retailers such as Wal-Mart Inc (WMT.N) and Target (TGT.N), expects revenue from its onshore U.S. business to reach $3 billion this year, triple 2007 levels, group managing director William Fung said on the sidelines of a shareholder meeting in Hong Kong.
Fung also expects revenue from its European onshore business to reach $1 billion this year.
Li & Fung is targeting annual turnover of $20 billion under its three-year plan for 2008-2010, of which $16 billion will come from the core sourcing business and $4 billion from onshore businesses in the US, Europe, and China, and a core operating profit of $1 billion.
"We haven't changed our targets. They are difficult but we are working hard to achieve them," Fung said.
With an about $1 billion war chest for merger and acquisitions after its recent $400 million note issue, the company aims to grow its onshore businesses in the United States and Europe as well as its cosmetics, beauty and skincare businesses through acquisitions, Fung said.
Last week, the company said it was seeking acquisitions in the footwear and cosmetics industries.
The exporter had previously expressed confidence a strong M&A pipeline and a return of consumer demand would underpin its bullish outlook for 2010, and it forecast a rise in future profitability as it moves to cut costs.
SAYS WEAK EURO MAY AFFECT CLIENTS
Li & Fung saw little impact from the current weak euro as some 95 percent of its deals are settled in dollars, but said the debt crisis in Europe may affect its clients, with the impact not likely to be seen until the end of this year or next year.
"Our direct impact (from the Europe debt crisis) will not be big. But as the situation continues, and as the euro and pound remain weak, it may have an impact on the purchasing power of our clients in Europe...we have to see how long the situation will last" Fung said.
He also pointed out that a weak euro may support exports from Europe, aiding a recovery.
"Since the overall atmosphere is on a recovery trend, we don't worry much," Fung added.
The exporter holds a positive view of its growth in 2010 helped by a strong recovery in United States, which accounts for more than 75 percent of its business.
"We will have strong growth this year," said Bruce Rockowitz, president, adding the U.S. market was "definitely driving our business in 2010."
The stock gained 1.59 percent by 0713 GMT on Tuesday 18 May, against a 1.09 percent rise in the benchmark Hang Seng Index .HSI. (US$1=HK$7.76) (Reporting by Donny Kwok; Editing by Jonathan Hopfner)
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