Money Finance News Harvey Norman boosts its offshore profit to $400 million
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Harvey Norman boosts its offshore profit to $400 million

harvey-norman
An 11.7 per cent rise in Harvey Norman's offshore profits to $129.70 million has offset a drop in revenue from local franchisees. Photo: AAP
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Harvey Norman has lifted full-year profit by 7.2 per cent to $402.3 million with its overseas ventures again outshining local franchisees, which struggled amid tough retail conditions.

The homeware, whitegoods and electronics retailer lifted total sales by 12.1 per cent to $2.23 billion in the 12 months to June 30, largely thanks to its 90 company-operated offshore stores breaking through the $2 billion sales barrier for the first time.

An 11.7 per cent rise in Harvey Norman’s overseas profitability to $129.70 million – including a 9.7 per cent lift in offshore revenue to $2.05 billion – offset a 2.3 per cent decline in revenue received from the company’s 195 franchised Australian complexes.

Revenue from local franchisees was $944 million for the year, with total franchisee sales down by 1.8 per cent to $5.66 billion amid a housing market downturn and broader economic jitters.

Harvey Norman announced a $173.49 million capital raising to manage debt, but still increased its final dividend by 3.0 cents to a fully franked 21.0 cents.

Shares in the company dropped by 1.82 per cent to $4.585 by 12.23pm, still 25 per cent higher than $3.66 a year ago.

Harvey Norman said it had been a particularly tough second half in Australia, with fourth-quarter aggregate comparable sales for franchisees dropping by 1.6 per cent, for a full-year comparable sales decline of 0.9 per cent.

The company said local franchisees had nonetheless continued to invest in their operations in anticipation of federal government tax cuts, stabilising house prices and an increase in lending by banks for mortgages and small business loans.

Chairman Gerry Harvey said the company has begun replicating its successful overseas premium store format in Australia and New Zealand.

A premium refit is currently underway at the company’s Cairns franchised complex, while franchised complexes at Campbelltown, Balgowlah, Preston and Aspley will commence post-Christmas.

The company said it intends to grow its international footprint with up to 21 new stores overseas within the next two years years, including 17 alone in Singapore and Malaysia.

“We intend to grow our international retail footprint and are on track with our expansion opportunities,” Mr Harvey said on Friday.

Harvey Norman’s Singapore and Malaysia segment increased profit by 48.1 per cent to $37.1 million for the year, while profit in Slovenia and Croatia ticked 0.8 per cent higher to $7.46 million.

In Ireland and Northern Ireland, profit nearly quadrupled to $6.39 million on double-digit growth across all key product categories.

Challenging economic conditions weighed on the company’s New Zealand stores, with profit from across the ditch dropping by 6.0 per cent to $77.39 million despite sales revenue increasing by $25.57 million.

Overseas revenue has now increased by 48 per cent over the last five years and profitability has nearly quadrupled.

HARVEY NORMAN LIFTS FY PROFIT ON OVERSEAS SUCCESS

* Net profit up 7.2pct to $402.3m

* Sales to customers up 12.1pct to $2.23b

* Fully franked final dividend up 3.0 cents to 21.0 cents

-AAP