Harvey Norman has reported profits that beat analyst estimates and its chairman said 90 per cent of Australians are unaffected by the global recession.
Net income at Australia’s largest electrical retailer fell 40 per cent to A$214.4 million ($180 million) in the year ended June 30th.
Earnings in Australia, where the company gets three- quarters of revenue, rose 4 per cent as government cash handouts stoked demand for flat-panel televisions and notebook computers.
Chairman Gerry Harvey said a pick-up in sales that started in April has extended into the first two months of this fiscal year.
“Harvey Norman’s better-than-expected result today highlights the strength of its franchise, government stimulus, success in cost removal and general resilience of the Australian economy,” Richard Barwick, an analyst at Morgan Stanley in Sydney, said in a note to clients today.
Australia has distributed more than A$12 billion in cash to households since December, helping the nation skirt recession.
“We continue to expect earnings growth in 2010, off the new, higher, base,” said Mr Barwick, who rates the stock “overweight”. Gerry Harvey said he’s “cautiously optimistic” about the outlook, without providing a specific forecast.
The company’s full-year result included A$27 million of writedowns to its stores in Ireland amid that nation’s first recession in a quarter century. All of his stores in the country are currently unprofitable.
“Ninety percent of Australians have had nil effect from this financial crisis,” Gerry Harvey said in an interview with Bloomberg.
“We are having a dreadful time in Ireland but we are committed to staying there and trying to get through.”
The company will pay a second-half dividend of 6 cents a share, bringing the payout for the year to 11 cents.
Bloomberg