Harvey Norman posts 1H profit lift

harveynormanHarvey Norman have reported net profit after tax of $185.51 million, representing an increase of 30.7 per cent on the $141.98 million result in the previous corresponding period.

Global sales rose eight per cent to $3.33 billion, while Australian franchisee sales revenue increased 7.7 per cent to $2.72 billion for the half year to December 31.

Earnings before interest and tax (EBIT) rose 27 per cent to $276.65 million.

“Australian macroeconomic conditions have had an upward trend for three years and have been favourable for consumption in the homemaker and lifestyle categories,” said Harvey Norman chairman, Gerry Harvey.

“Harvey Norman is a homemaker, lifestyle and connected home retail concept and the appeal and strong positioning of the franchise offering is apparent in these results today.”

The company says its homemaker category benefited from the strong Australian housing market in 2015, coupled with cheaper petrol prices and low interest rates.

Moody’s Analytics predicted on Thursday housing growth will slow over 2016 and 2017 but not slump, with wages growing at their slowest pace on record and unemployment ticked up to six per cent in January.

But the 76-year-old said prophets of doom are misguided and he sees no reason to ignore the economy’s resilience. Harvey says housing construction and population growth will continue to fuel Harvey Norman’s sales growth.

“You’ve just seen an economy that was very strong have a resources boom that came to an abrupt holt. Prices crashed and this economy has survived that,” he told AAP.

“You’ve got an interest rate that’s at its lowest in 50 years, unemployment low by standards of the last 50 years – all the indicators are that the economy is very strong.”

A day after rival electronics retailer Dick Smith confirmed its demise, Harvey sees it as a boost for Harvey Norman.

“If a competitor’s doing $1 billion in sales in Australia, obviously all the other people in that category are advantaged by it,” he said.

“It’s no different to when Masters go, there’s certain things that they sell that we sell, so we’ll be advantaged when a competitor is out of the market.”

After Dick Smith’s announcement on Thursday, the company’s eponymous founder – who sold the business in 1982 – sounded a warning for Harvey.

“If Gerry Harvey’s not careful, he’s going to be next,” Dick Smith told NewsCorp Australia.

“I just reckon there’s no money in consumer electronics – that’s why I sold out 30 years ago. And Gerry should realise that quickly.”

Harvey insisted Mr Smith was a close mate and a “great Australian”, but said he probably made the comments before he saw Harvey Norman’s results.

“I’ll invite him out to have a look at our figures,” Harvey said.

Electronics have been key in driving global sales up eight per cent higher, Harvey said.

“With the latest things happening with phones, tablets and computers out there the product is good,” he said.

“The prices are so good people are spending in that category rather than other categories.”

He believes the strong numbers send a message to his critics.

“They can’t write me off. If anyone is out there criticising me after today you’ve got to say `what’s their angle?’,” he said.

Harvey Norman’s shares closed down eight cents to $4.53.

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