Harvey Norman FY profit up 9 percent

Harvey Norman has reported a 9 percent rise in profit for the year ended June, saying its franchising operations segment continues to underpin the overall performance of the group.

Revenue from continuing operations totalled $2.7 billion, compared with $2.45 billion in FY10, contributing to a profit after tax and non-controlling interests of $252.26 million, up from $231.41 million a year previous.

Revenue generated by its 195 franchisee-owned stores totalled $5.08 billion, down from $5.19 billion in FY10, whilst revenue from its 96 company-owned stores was up from $1,344 million in FY10, to $1,556 million for the year.

The retailer said that although its franchising operations margin fell from 5.99 percent to 5.01 percent for the financial year, it produced a significant net operating cashflow of $301.8 million, up from $286.9 million in FY10.

“There has been much commentary about the cautious consumer, however our franchisees have never experienced so much customer traffic and transactions. Even though this is putting pressure on costs, as each franchise business has many more customers yet lower revenue, the Australian consumer is being rewarded with lower prices,” it said in a statement to the ASX.

Harvey Norman said its integrated retail, franchising and property strategy is delivering results, with net assets for the year totaling $2.235 billion and net debt to equity ratio sitting at a conservative 21.87 percent.

“The Harvey Norman brands experienced a strong increase in customer transactions … mainly due to the strong Australian dollar reducing prices.”

Looking forward, the retailer said it remains cautious in its outlook for 2011/12 due to global volatility, increased utility costs, a possible rise in unemployment and dampened housing markets.

Despite these negative market influences, Harvey Norman said it’s looking forward to the addition of its e-commerce site to the business, which is due to launch in early October.

“Using market intelligence … we are confident our online transactional strategy will produce incremental dollars to the existing channel.”

The Board has declared a fully franked final dividend of 6 cents per share.

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