Harvey Norman 2nd Half Profits Down 14%
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Despite a profit downfall of 14 percent, mega retailer, Harvey Norman, remains bullish about the potential for future growth from key areas where it claims to be growing its market share.

These areas, namely the convergence products such as plasma and LCD Screens, personal computers, digital imaging, digital hard drive recorders, portable media players and home networking have strong potential for improved revenue and overall market share in the future, said the company.

Consolidated profit from ordinary activities after tax attributable to members for the second half-year came in at only $70 million down from nearly $82 million the year before.

However, after showing some growth in the first half, the company has ended the full year virtually flat.

Operating profit after tax was $171.44 million, down from last year’s result of $176.05 million, a decrease of 2.62% on the previous year. However the company points out that last year’s results included a $4.8 million contribution to net profit from the sale of industrial warehouses in Caringbah and offices/warehouses in Riverwood. Taking this out of the equation puts this year’s result up on last year by a fraction.

The basic earnings per share was 16.20c and the board has announced a dividend of 3.5 cents per share.

Discounting was blamed for the depressed profit results, which the company described as the result of “difficult trading conditions and margin pressures, particularly during the second half”. It also pointed to rising fuel costs impacting family income and the downturn in the residential property market affecting its renovation and commercial franchisees. The company had already blamed sluggish growth in the first half on an unseasonably cool summer which reduced sales of air conditioning and refrigeration products.

Harvey Normans said that the expansion of locations in the Australian market will continue despite the reduced second half profits and revealed that a new convergence concept store is scheduled to open in Sydney’s Castle Hill in November this year.

Shares in the company fell an initial 5 per cent on the news before recovering slightly.