S&P lowers Li & Fung outlook to negative

S&P said it revised its outlook for Li & Fung Ltd. to negative from stable and affirmed its BB+ ratings for the company and its senior unsecured notes. The agency also affirmed the B+ rating on Li & Fung’s subordinated perpetual hybrid securities. The recovery rating on the senior unsecured notes is unchanged at 3.

“Li & Fung's weaker first-half performance indicates recovery could be delayed. The company's core supply-chain solutions business, which contributed about 62% of EBITDA in 2022, saw a 30% year-on-year decline in turnover and a 42% fall in EBITDA in the first half of 2023. The sharp decline was due to the high base in the first half of 2023. That said, revenue scale for the segment has now shrunk to below 2020 levels,” S&P said in a press release.

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