Harvey Norman's profit slides by 16%

Jean-Francois Monier/AFP/Getty Images
  • Harvey Norman net profit after tax $375.38 million, down 16.4%.
  • Underlying net profit before tax $532.54 million, down 0.96%.
  • A fully-franked dividend of 18 cents a share.

Retailer Harvey Norman reported a 16.4% drop in full year statutory profit to $375.38 million, dragged down by property valuations and losses from a dairy joint venture.

Underlying net profit before tax was down by 0.96% to $532.54 million, the second highest in the company’s history.

Net property revaluation was down by $56 million, to $51.65 million from $108.05 million.

The furniture and household foods retailer also had impairment losses of $49.44 million relating to the Coomboona Holdings joint venture.

Coomboona, for which Harvey Norman paid $34 million in 2015 for a 49.9% stake, went into administration in March this year.

Harvey Norman’s share price has been under pressure since the company reported half-year earnings on February 28. The shares fell by 12.4% to $4.01, the biggest one day drop in two decades.

In early trade today, they were trading at $3.71, down 1.6%.

The company today also announced a rights offer to raise $163.85 million at $2.50 a share to reduce debt. Shareholders can apply for one share for every 17 they hold.

Billionaire Gerry Harvey, the chairman, says the Harvey Norman brand has grown to become a strong global player with “solid results” by the 89 company-operated stores across seven countries.

Retail sales in New Zealand were just under $1 billion in local currency and sales in Asia were just under $500 million for the 2018 financial year.

“We fully intend to capitalise on this excellent performance overseas, and plan to invest substantially in growing our offshore Harvey Norman store network, particularly in South East Asia,” says Harvey.

“We are actively exploring new sites, and there is an expectation to open up to 18 new Harvey Norman company-operated stores overseas within the next 2 years — which will likely be the beginning of our biggest organic growth spurt in over a decade.”

The overseas business represents 22% of total consolidated profit before tax.

In Australia, franchisee headline aggregated sales revenue increased by 2.6% to $5.76 billion in a competitive market.

“With emerging or restructured competitors — both big or small, online or physical — our robust investment property portfolio keeps us a step ahead and ready to respond to the evolving and dynamic needs of consumers,” says Harvey.

“Our physical complexes provide the flexible, large footprint needed to showcase the best on offer and demonstrate the maximum capabilities of those products to integrate and connect our busy day-to-day lives.”

The company declared a fully-franked dividend of 18 cents a share.

The 2018 results:

Source: Harvey Norman

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