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Li & Fung Ltd  (OTCPK:LFUGF) Gross Margin %: 11.32% (As of Jun. 2017)

Gross Margin % is calculated as gross profit divided by its revenue. Li & Fung Ltd's Gross Profit for the six months ended in Jun. 2017 was $823 Mil. Li & Fung Ltd's Revenue for the six months ended in Jun. 2017 was $7,264 Mil. Therefore, Li & Fung Ltd's Gross Margin % for the quarter that ended in Jun. 2017 was 11.32%.

Warning Sign:

Li & Fung Ltd gross margin has been in long term decline. The average rate of decline per year is -5.4%.


OTCPK:LFUGF' s Gross Margin % Range Over the Past 10 Years
Min: 10.48   Max: 14.91
Current: 11.48

10.48
14.91

During the past 13 years, the highest Gross Margin % of Li & Fung Ltd was 14.91%. The lowest was 10.48%. And the median was 11.57%.

OTCPK:LFUGF's Gross Margin % is ranked lower than
90% of the 628 Companies
in the Global industry.

( Industry Median: 35.13 vs. OTCPK:LFUGF: 11.48 )

Li & Fung Ltd had a gross margin of 11.32% for the quarter that ended in Jun. 2017 => No sustainable competitive advantage

The 5-Year average Growth Rate of Gross Margin for Li & Fung Ltd was -5.40% per year.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Li & Fung Ltd Annual Data

Dec07 Dec08 Dec09 Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16
Gross Margin % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 14.18 11.66 11.31 11.47 11.57

Li & Fung Ltd Semi-Annual Data

Dec07 Jun08 Dec08 Jun09 Dec09 Jun10 Dec10 Jun11 Dec11 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17
Gross Margin % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 11.14 11.74 11.53 11.61 11.32

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

Li & Fung Ltd's Gross Margin for the fiscal year that ended in Dec. 2016 is calculated as

Gross Margin % (A: Dec. 2016 )=Gross Profit (A: Dec. 2016 ) / Revenue (A: Dec. 2016 )
=1939.8 / 16760.632
=(Revenue - Cost of Goods Sold) / Revenue
=(16760.632 - 14820.801) / 16760.632
=11.57 %

Li & Fung Ltd's Gross Margin for the quarter that ended in Jun. 2017 is calculated as


Gross Margin % (Q: Jun. 2017 )=Gross Profit (Q: Jun. 2017 ) / Revenue (Q: Jun. 2017 )
=-6441 / 7263.594
=(Revenue - Cost of Goods Sold) / Revenue
=(7263.594 - 6441.043) / 7263.594
=11.32 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Li & Fung Ltd had a gross margin of 11.32% for the quarter that ended in Jun. 2017 => No sustainable competitive advantage


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.


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