LITTLE ROCK — Li & Fung Ltd. said orders are picking up in the U.S., its biggest market, after the world’s largest supplier of clothes and toys to retailers reported a bigger-than-expected jump in 2011 profit. The stock surged.
Chief Executive Officer Bruce Rockowitz said customers in the U.S., where the company made 60 percent of its $20 billion revenue, are turning more optimistic. Li & Fung, a supplier of Wal-Mart Stores Inc., on Thursday reported net income rose 24 percent to $681 million, beating the average $635 million estimate of nine analysts surveyed by Bloomberg.
The results and improved outlook for the U.S. helped drive up shares of Li & Fung by 4.2 percent Friday to the highest in almost a year.
The Hong Kong-based company increased earnings by acquiring rivals and entering supply agreements to sell American and European retailers consumer goods that are mostly made in Asian countries, such as China and Thailand.
The company sees opportunity to make more purchases in areas such as beauty and health care, Deputy Chairman William Fung said Friday.
“When things are not looking good in the world in general, it’s probably good for opportunities,” he said. “Our primary focus would be the markets we sell to, the U.S. and Europe. Europe is not looking very good, there may be opportunities.”
The stock rose to $2.55 at the close of Hong Kong trading Friday. It has gained 38 percent this year, compared with a 12 percent gain for the benchmark Hang Seng Index.
Citigroup raised its rating on the stock to buy from neutral, citing improving margins. Acquisitions made in 2011 could add about 4 percent to 2012 revenue, analyst Eddie Lau said in a note to clients Friday.
Li & Fung has spent more than $3 billion on deals from 2006 to 2011, driving up sales and profit in the five-year period, according to data compiled by Bloomberg.
Li & Fung’s Wal-Mart division, started after a 2010 supply agreement, should turn profitable in 2012 after a “small loss” in 2011, Rockowitz said.
Business, Pages 26 on 03/24/2012