A strong performance across its chain of company-owned stores and improved conditions abroad have boosted Harvey Norman’s fortunes with the company posting strong half-yearly results today for the six months ended 31 December 2013.

While global sales revenue from Harvey Norman’s 202 franchised stores only edged up slightly (up $35.28 million, or 1.9 per cent, to $2.48 billion for the six months), revenues from Harvey Norman’s 81 company-operated stores climbed by almost three times that amount, up $100.03 million to $776.96 million (an increase of 14.8 per cent).

Click here to sign up for our free daily newsletter

Across the company, earnings before interest and tax almost doubled to $178.25 million (up 44.9 per cent year-on-year) while profits (after tax and non-controlling interests) were up 36 per cent year-on-year to $111.42 million. Global sales increases 4.9 per cent on a like-for-like basis to $2.99 billion.

The company’s results did factor in a net property revaluation decrement of $8.61 million, compared to the much higher $44.97 million from the same period last year.

The performance is a strong one for a company that has had mixed fortunes in recent years. As with Harvey Norman’s first quarter results, appreciation of foreign currencies help to drive growth, with the company seeing good results in New Zealand, Slovenia/Croatia and Ireland.

Total sales results in these three regions were up 15 per cent, 13 per cent and 21 per cent respectively (when measured in Australian dollars); however sales for the embattled Northern Ireland (UK) market were down 23 per cent year-on-year (driven by a sharp drop in the first quarter that was not fully recovered in the second quarter).

Australia was relatively unchanged by comparison — total sales for the half increased 1.4 per cent year-on-year, while like-for-like sales were up 3.3 per cent.

Speaking about the results, Harvey Norman chairman Gerry Harvey called out strong pre-Christmas trade and the value inherent in the company’s property holdings as two key highlights:

We achieved a strong increase in profit in an environment where consumer spending growth was modest. This improved performance reflects sound strategic decision-making across our business and growing traction from our omni-channel strategy.

Our franchising operations segment recorded improved profitability while Australia franchise sales showed strong momentum improving on gains recorded in the September quarter to increase 1.7 per cent on a headline basis and 3.6 per cent on a like-for-like basis in the December quarter. That’s a pleasing set of numbers for the important Christmas trading period.

Our property portfolio continues to underpin the Harvey Norman business through the strength and stability it provides. We have more than doubled our net asset base in the last nine years and our property assets have provided a solid foundation to our integrated retail, franchising and property system for more than three decades. 

To my mind, our ownership of real property is an absolute competitive strength when compared with the intangibles and goodwill that figure prominently on the balance sheets of many of our competitors.

Harvey also noted the strong performance of New Zealand and Irish businesses (the latter benefiting from “loss reduction measures and growing brand recognition” as well as a strengthening Irish economy); however a “softer consumer environment” in Singapore and the roll out of new IT systems in Asia impacted the business in that region.