Harvey Norman shares tumble despite big profit growth
Harvey Norman delivered double-digit sales growth and increased its dividend, but the retailer’s shares have tumbled.
The electronics and homewares retailer announced on Friday it made a pre-tax profit of $466.31 million in the half year to December 31, up 16.5 per cent on the previous year.
Excluding the impact of real estate revaluations and leases, its pre-tax profit rose 20.1 percent to $372.8 million, while system sales revenue increased 6.9 percent to $5.2 billion.
Rudi Filapek-Vandyck, founder of FNArena he tweeted According to Citi, the interim report missed estimates on most key financial metrics.
Harvey Norman chairman Gerry Harvey said he was surprised by the decline in shares.
Mr Harvey told AAP the company thought it was “a pretty good result and I think the shares will go up rather than down”.
Sales from the company’s 196 Australian dealers rose 4.8 per cent to $3.5 billion; The company said this reflects continued demand for technology-driven products, particularly AI-enabled computing and mobile devices.
Mr Harvey said franchisees’ Australian sales were “very good overall” and the company’s international operations, which cover seven countries, were doing “pretty well”.
“We think Malaysia and Singapore will become stronger,” he said.
Harvey Norman will pay a fully-fledged interim dividend of 14.5 cents per share, up 20.8 percent from its interim dividend of 12 cents a year ago.
Harvey Norman shares closed Friday at $5.76, down 9.0 percent, at their lowest level since early August.
Mr Harvey said Harvey Norman continued to be misunderstood and underappreciated by the market.
“Harvey Norman isn’t actually a retailer. It’s a retailer-real estate company,” he said.
Mr Harvey said it was constantly compared to JB Hi-Fi or Good Guys, which have no real estate, whereas Harvey Norman owns a large amount of real estate around the world.
“We are a very different kind of retailer because we are an owner and a retailer,” he said.
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