Press releases

Hong Kong, 25 March 2009 – Hong Kong-based global consumer goods exporter Li & Fung Limited (“Li & Fung” or “the Group”, SEHK: 494) today announced strong turnover growth for 2008 despite a very difficult market.

For the year ended 31 December 2008, the Group’s turnover was HK$110,722 million (US$14,195 million), 20% higher than the year before. The strong growth in turnover reflects the Group’s strength in expanding its market share due to resilient organic growth and the flow of outsourcing deals and acquisitions. The Group’s core operating profit decreased slightly by 3% to HK$3,084 million. Profit attributable to shareholders reached HK$2,422 million, a decrease of 21% compared to 2007. Basic earnings per share were 69.3 HK cents, a decrease of 23% compared to 89.5 HK cents in 2007.

Apart from the overall weak market sentiment, the bottom line was also affected by a number of one-off events including restructuring costs in many of the high cost cities, in particular the US onshore business as this was rationalized after three years of numerous acquisitions, start-up costs incurred for the European onshore business, certain provisions made due to a small number of customers’ bankruptcies in 2008, and a one-time gain from disposal of property holding subsidiaries in 2007 which was not present in the 2008 accounts.

The Group had been successful in further diversifying our business geographically with turnover from Europe growing to 29% in 2008 from 26% in 2007.

The Board of Directors has proposed a final dividend of 33 HK cents per share (2007: 50 HK cents). Together with an interim dividend of 24 HK cents (2007: 21 HK cents), the total dividend per share for 2008 was 57 HK cents (2007: 71 HK cents).

Mr William K Fung, Group Managing Director of Li & Fung Limited, commented: “There is no doubt that consumer sentiment is very weak but the Group continues to gain significant market share through an accelerated flow of outsourcing deals such as Toys”R”Us’ private label business, Sanrio, Timberland’s apparel business and Mexx in 2008 as well as the Liz Claiborne outsourcing deal in 2009. Our ability to orchestrate resources quickly in response to a rapidly changing marketplace has enabled Li & Fung to take advantage of the flow of outsourcing deals that have come our way. In addition, we are very pleased to report that the Group’s financial strength is highly resilient despite uncertainty in the external financial market. We continue to enjoy healthy cashflows and have strong credit ratios.”

Mr Bruce Rockowitz, President of Li & Fung (Trading) Limited, said: “Our commitment to a focused and strategic two-pronged acquisition strategy has continued to bear fruit in 2008. We have made a total of five smaller acquisitions: Imagine, RT Sourcing, Silvereed Group, Wilson & Wong Trading and Giant Merchandising; and two large acquisitions: Van Zeeland and Miles Fashion.

Mr Rockowitz continued: “In 2008, Li & Fung began to develop the European onshore business. In much the same way as the Group established the US onshore business, the first year was a start-up period with associated costs and we expect the European onshore business to reach its Three-Year Plan targets in 2010. Overall, we anticipate that outsourcing deals and selective acquisitions will be a key plank of our Three-Year Plan 2008-2010 as the Group pursues this growth strategy given the uncertain economic environment.”

“The Group recognizes the challenging times faced by companies worldwide. We will be monitoring market conditions to ensure the continuing strength of our franchise and to meet our responsibilities to all our stakeholders including customers, employees, vendors and shareholders.”

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