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Harvey Norman's Net Profit Jumps 30.7%

Harvey Norman's Net Profit Jumps 30.7%
Reported sales revenue during the first half rose 8.6% to $912million.
Feb 26, 2016 By Ben Khouri Tags: HVN

Harvey Norman Holdings Ltd (ASX:HVN) have released their results for the half-year ending 31st December 2015. Supported by growth in domestic and global sales, the home retailer reported improvements in earnings and profit.

Sales Revenue up 8.6%; Net Profit up 30.7%

Reported sales revenue during the first half rose 8.6% to $912million, derived from franchisee sales revenue of $2.72billion.

Moreover, statutory NPAT improved 30.7% over the period, to $185.5million. Profit before tax, excluding impairment losses rose 36% to $279.5million. Excluding property revaluation adjustments, the net profit would have increased just over 22%. Alongside EBITDIA growth of 27.7%, to $333.4million, operating cash flow moderately improved by 4.1%, to 141.8million.

Harvey Norman attributes their strong performance during this period to a multitude of factors. Namely an increase in the profitability of the franchising segment, due to a 10.2% increase in franchise fees, along with a 26.2% decrease in tactical support provided to franchisees.

The company saw a 8% increase in Headline Global Sales Revenue, to $3.33billion, with Australian, New Zealand, and Irish headline sales expanding by 7.7%, 6.4%, and 12.7% respectively. Global sales have been positively affected by a 5.5% upward movement in the Euro, along with a 16.1% appreciation in the UK Pound. The Irish business recorded its first profit since December 2007. 

Chairman and Founder Gerry Harvey attributes the strong results, in part to the overall accommodative consumer environment, and the strong housing market in 2015: “Homemaker sales benefited from the strong Australian housing market in 2015 with house prices and building approvals reaching record levels. Coupled with much cheaper petrol prices, low interest rates and increased household wealth remain supportive of property investment and household and lifestyle consumption.”
Harvey Norman’s Net Debt to Equity ratio has remained relatively steady, increasing slightly to 22.29%. However since the PCP in 2011, balance sheet gearing has decreased, where it was 29.74%."

Dividend Raised to 13 cents

The board has recommended the payment of a fully franked dividend of 13 cents per share, which will be paid on 2 May 2016, with the record date being 8 April 2016.

2016 Franchisee Sales

Sales from the franchised Harvey Norman complexes, commercial divisions and other such sales outlets increased by 6.7% between the period of 1st January-February 25th 2016.

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Ben Khouri Author: Ben Khouri Feb 26, 2016

Ben Khouri is a financial editor for Wise-Owl with a particular focus on the top ASX 300 companies. Having a vast background in economics and finance, Ben provides financial commentary & analysis as well as global market updates, which guide investors in devising investment strategies. Ben specialises in analysing economic data and global events from around the world and examines the impacts they have on the major equity markets.

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