February 27, 2009 - 10:14AM Electronics and furniture retailer...

February 27, 2009 - 10:14AM
Electronics and furniture retailer Harvey Norman Holdings Ltd has reported a 56.8 per cent fall in first half profit and says trading conditions remain challenging.

Net profit for the half year ended December 31 was $99.33 million, down from $230.15 million in the previous corresponding period.

Its underlying business operations profit was $123.52 million, down 29.1 per cent from $174.14 million.

The company will pay an interim dividend of five cents, down from seven cents in the previous first half.

"The payment is consistent with the need for continuing our prudent financial stewardship," Harvey Norman chairman Gerry Harvey said in a statement on Friday.

"We have a strong balance sheet and cash flow.

"We are well placed for the future.

"This global recession will be here for some time and it might just be the case that Harvey Norman will be one of the few of the strong left standing.

"Our debt to equity ratio is a very strong 30.1 per cent."

Mr Harvey said trading conditions remained challenging but the company's core segments were resilient.

"Our financial performance from underlying business operations in this period of global economic downturn must be viewed in light of the retail boom conditions experienced during half year 2007," he said.

He said trading conditions in Ireland remain extremely difficult.

"We have taken an impairment charge of $17 million against the written down value of our plant and equipment in Ireland."

There was also a loss of another $19.81 million recorded by the operations in Ireland and Northern Ireland.

The franchising operations segment result before tax for the first half was $149.42 million, compared to $171.24 million, a decrease of 12.7 per cent.

"Despite challenging trading conditions, franchisees in Australia continued to grow market share in all key product categories," the company said in a statement.

"The integrated retail, franchise and property system is strong and resilient."

Franchisee sales revenue for the half year was $2.61 billion, compared to $2.54 billion previously, an increase of 2.7 per cent.

Company owned store sales revenue rose to $770.35 million, from $764.67 million.

Harvey Norman has 271 retail complexes in Australia, New Zealand, Asia and Europe trading under the Harvey Norman, Domayne, Joyce Mayne, Norman Ross brands. Harvey Norman owns property valued at $1.77 billion.

At 1148 on Friday, Harvey Norman shares were down four cents at $1.90.