Hampered by restructuring costs at its US business and declining profit margins, Li & Fung (0494) yesterday said it could no longer meet its three-year profit target.
The global supply chain manager reported a core operating profit of US$511 million (HK$3.98 billion) in 2012, down 42 percent from the previous year.
"We will miss the profit target," said chief executive Bruce Rockowitz. The firm had aimed since 2011 to boost its core profit to US$1.5 billion by 2013.
Net profit totalled US$617 million, or 58.1 HK cents per share last year, down 9 percent from 2011.
It cut the final dividend to 16 HK cents per share from 34 HK cents. Full-year payout will be 31 HK cents, down 42 percent.
Total revenue edged up slightly to US$20.2 billion in 2012, out of which US$16.13 billion, or 80 percent, came from the core trading operation.
Operating profit from this segment, however, fell 6.9 percent from 2011 to US$526.2 million due to the overall downtrend in average unit prices.
Li & Fung's logistics business contributed US$23.9 million profit last year, up 34.2 percent from 2011.
The distribution unit suffered a net loss of US$38.9 million compared with a profit of US$299 million in 2011 as the US business continues to be revamped.
The United States accounted for 62 percent of total revenue in 2012. China and other developing countries in Latin America and South Africa also booked positive growth, while sales tumbled in Europe, Canada and Australasia.
Rockowitz said the firm had no fundraising plan as it could rely on organic growth and acquisitions
Li & Fung will maintain the dividend payout at around 60 percent, Fung said.
Its shares rose 1.1 percent to HK$10.56 yesterday before the results were released.