Li & Fung Ltd. (00494.HK), a Hong Kong-based supplier of consumer goods, said it expects to enjoy lower purchasing costs in mainland China in view of the weaker renminbi in the long run.
However, the recent depreciation of the Chinese currency by only a few percentage points will not help the company much in the short term, chairman William Fung Kwok-lun said in a post-results announcement press briefing on Thursday.
Over the long run, the company will benefit from the renminbi depreciation as it buys goods in China in US dollars, Fung said.
Spencer Theodore Fung, Li & Fung chief executive and nephew of the chairman, said the company’s income was dragged down by a sluggish economy in Europe and a 3 percent depreciation in the euro in the first half.
However, the company expects to maintain its gross margin at about 11.4 percent in the second half, roughly same as in the first six months of the year, amid stable orders and cost cuts, he said.
Core operating profit fell 19.7 percent to US$182 million in the first six months from the same period last year while net profit grew 33.4 percent to US$149 million due to a one-off loss last year, the company said in a stock exchange filing.
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