Finance Finance News Kathmandu won’t repay JobKeeper millions despite soaring profits
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Kathmandu won’t repay JobKeeper millions despite soaring profits

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Kathmandu says it won’t repay almost $40 million it received in JobKeeper and other government grants, despite restarting dividend payments after first-half profits soared.

On Tuesday, the outdoor retailer unveiled a $NZ22.2 million ($20.5 million) profit for the six months ended January 31, up a whopping 193.9 per cent on the same half last year.

Investors were rewarded with a $14.1 million dividend, admitting Kathmandu into the growing club of profitable companies participating in the so-called DividendKeeper trend.

A company spokesperson confirmed in an email to The New Daily that Australian taxpayers wouldn’t receive a cent in reimbursements.

Chairman David Kirk said the company had “thought hard” about repaying taxpayers, but decided that doing so would be a transfer of shareholder funds to the government.

But Labor MP Andrew Leigh, who has called for a public inquiry into JobKeeper, said Kathmandu should cough up its JobKeeper millions.

“JobKeeper was meant to be for firms suffering a major drop in earnings, yet Kathmandu got it while enjoying a rise in their profits,” Dr Leigh told TND.

“If they’re doing well enough to pay shareholder dividends, they’re doing well enough to repay taxpayers.

“And if the Morrison government hadn’t given so much JobKeeper to firms with rising profits, it wouldn’t have to be prematurely cutting off the program at the end of March.”

Labor MP Andrew Leigh wants an inquiry into JobKeeper. Photo: AAP

All up, Kathmandu took about $NZ41.7 million ($38.6 million) in wage subsidies and other grants across Australia, New Zealand and other countries.

Most of Kathmandu’s wage subsidies were from JobKeeper, while about $NZ6.33 million ($5.88 million) was received in NZ.

But we don’t know exactly how much JobKeeper the Rip Curl and Oboz owner took, because the company booked payments as “government grants” and did not split out each program.

Kathmandu reported $NZ21.2 million ($19.6 million) in government grants received last financial year (ended July 31), helping to fuel a $NZ8.9 ($8.24 million) profit, despite lockdowns.

Chief executive Xavier Simonet said on Tuesday that Kathmandu was “particularly impacted” by COVID-19 travel restrictions, even though a surge in surfing helped first-half sales rise 12.9 per cent to $410.7 million.

“To respond to increased participation in local travel and adventure, our brands adjusted their focus to product categories in high demand, such as wetsuits and surfboards,” he said in a statement on Tuesday.

Dozens of public companies that took JobKeeper have since booked profits and handed out dividends, as first revealed by The New Daily earlier in March.

TND analysis found more than $1 billion was paid under JobKeeper to public companies that booked a profit, handed out dividends, or paid executive bonuses during the pandemic last year.

  • Check out our exclusive analysis here

A separate report published by shareholder activist firm Ownership Matters last week found that more than 30 companies recorded higher profits in the last six months of 2020 after taking JobKeeper.

JobKeeper payments were equal to 20 per cent of underlying earnings on average, according to the report, which analysed companies on the ASX 300.

But despite the prevalence of large, profitable companies taking JobKeeper subsidies, Treasurer Josh Frydenberg has so far resisted calls for a public inquiry and has not published data on how quickly businesses taking government handouts recovered from the pandemic.

The Auditor-General is conducting an investigation of the JobKeeper program, but the inquiry will only focus on companies that broke the program’s rules, while ignoring companies that followed the rules but took subsidies despite not needing them.

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