The company's net earnings in 2008 fell short of market forecasts after tumbling to HK$2.42 billion, with its net profit for the second half nosediving 41 percent to HK$1.18 billion.
Core operating profit in 2008 also dropped 3 percent to HK$3.08 billion, dragged by one-off costs of HK$639 million in restructuring, start-ups and provisions for customer bankruptcies.
Despite the drop in earnings, the company managed to maintain a strong turnover growth amid the weak consumer market sentiment last year. Turnover in 2008 jumped 20 percent, in which 12 percent came from its organic growth and 8 percent from the acquisition growth.
The US and European markets remained Li & Fung's key sources of revenue, accounting for 62 percent and 29 percent of its total turnover in 2008.
In response to the profit decline, Li & Fung cut its final dividend by 34 percent to HK33 cents.
Managing Director William Fung said at yesterday's press conference that some of the customers have adjusted their inventory levels by extending their fourth-quarter shipment to the first quarter of 2009, after the collapse of the Lehman Brothers in September last year.
"Due to the impact of the financial tsunami, many of our customers expect their business to drop by 10 to 20 percent (this year)," Fung said.
Fung also expects existing customers to experience "no growth" in 2009, while all of the company's growth will come from its outsourcing deals and acquisitions.
The company has set aside $100 million each year for its small roll-up deals in 2009, while it has also raised $500 million in September last year for making larger acquisitions.
Around $240 million was spent on two large acquisitions of Van Zeeland in the US and Miles Fashion in Germany last year, which means the company still has adequate capital for more acquisitions this year, Fung said.
"We have not seen so many acquisition opportunities for a long time," he added.
Asked if Li & Fung will adjust its three-year plan of achieving $20 billion in 2010 because of the deteriorating market situation, Fung noted that it is too early to say so.
"We still have acquisitions in mind and adequate cash to do it, while several big companies are thinking of outsourcing their merchandising business as well," Fung said.
