Harvey Norman predicts big net profit increase for second half

By Matthew Henry

SYDNEY: Harvey Norman today reported an 11.6 per cent quarter-on-quarter rise in sales for the three months to 30 September 2007 to $1.39 billion, and also predicted a big increase in net profit by up to 35 per cent for the second half of the 2007 calendar year.

Buoyed by strong sales of flat panel TVs, the result included all of the retailer’s stores in Australia, New Zealand, Ireland and Slovenia, as well as its commercial division and other sales outlets, but excluded the Singapore business.

Like-for-like sales increased by 5.7 per cent over the same period the year before.

In the last six months of 2006, Harvey Norman’s net profit was $132.87 million, but the company expects the final result for the same period this year will be within the range of 25 to 35 per cent higher again, or up to approximately $180 million.

“The directors of the company expect the net profit from continuing operations for the six months ending 31 December 2007 will increase within a range of 25 per cent to 35 per cent over the net profit from continuing operations for the six months ended 31 December 2006,” Harvey Norman CFO, Chris Mentis, told the Australian Securities Exchange (ASX )today.

Mentis also acknowledged media speculation that full financial year profit after tax would grow by up to 28 per cent but did not officially endorse the prediction.

“The directors of the company are aware of some commentary by analysts in relation to market expectations about the projected profit of the company for the year ending 30 June 2008,” said Mentis in a release to the ASX.

“The company understands that the published commentary by analysts who regularly publish commentary about the prospects of the company is that, in the respective opinions of those analysts, the net profit after tax (NPAT) of the company, excluding net property revaluation increment, for the 12 months ending 30 June 2008 will increase within a range of 12 per cent to 28 per cent over the NPAT for the 12 months ended 30 June 2007. Directors of the company are not prepared to speculate on NPAT for the year ending 30 June 2008.”

Harvey Norman will hold its annual general meeting on 20 November 2007.