Li & Fung has announced that its strategy to create the “supply chain of the future” has received an important boost. The Asian provider of supply chain solutions has completed a simultaneous bond tender offer and new bond offering that will strengthen its equity by $375.8 million, representing 50.1 percent of an outstanding $750 million bond that is maturing in May 2020.
This comes after the group's logistics business received an investment of $300 million in June this year. Li & Fung sold a 21.7 percent stake in its logistics business to Temasek, a Singapore-based investment company, postponing plans for a previously contemplated spin-off of the segment through an initial public offering.
The company said these transactions are important steps aimed at deleveraging the company's balance sheet and providing higher financial flexibility for its upcoming three-year business plan (2020-22), designed to seize market opportunities amid global trade disputes and to accelerate the deployment of its strategy.
The management noted that it has made significant progress in its current three-year plan ending in December, coming up with solutions and digital tools to improve the speed of supply chains for businesses, realizing tangible improvements in inventory management, sell-through and markdowns. It said it is winning market share and new customers thanks to its global diversified network and 3D virtual design services.
In August, the company reported a profit attributable to shareholders of $21 million for the first half of the year, compared with a loss of $86 million for the same period a year-ago. However, on a comparable basis, revenues were down by 8.4 percent to $5,360 million, mainly due to ongoing destocking, customer turnover and customer bankruptcies as brands and retailers continued to face pressure on sales and margins. The gross margin improved by 0.4 percentage points to 10.9 percent.