The Harvey Norman Holdings Limited (ASX: HVN) share price is under the spotlight after the retail business announced its HY23 result for the half year to 31 December 2022.
HY23 result
Here are some highlights from the report:
- EBITDA (EBITDA explained) dropped by 8% to $694 million
- Reported net profit before tax declined by 15% to $522.7 million
- Reported net profit after tax (NPAT) fell by 15% to $365.9 million
- Total system sales revenue increased by 1.4% to $4.98 billion
The company revealed that its company-operated overseas retail store profit before tax (PBT) makes up almost a quarter of overall PBT, excluding net property revaluations. Overseas retail profitability declined by 22.5% to $99.6 million, primarily due to difficult trading conditions in New Zealand.
Harvey Norman is aiming for 80 stores in Malaysia by the end of 2028. During the FY23 first half, it opened its 28th company-operated store in Malaysia.
In Australia, the franchising operations segment’s PBT was $237.7 million, a decrease of around 19%.
Harvey Norman did say that its net assets had increased to $4.46 billion, an increase of around $300 million over the 12 months to December 2022.
Harvey Norman dividend
The board of Harvey Norman decided to declare a fully franked half-year dividend of 13 cents per share. This represents a cut of around a third, or 35%.
If Harvey Norman were to pay another 13 cents per share dividend in six months, the total dividend would be 26 cents – a dividend yield of around 6.25%, excluding the effect of franking credits.
What to make of this for the Harvey Norman share price
Investors were negative, with the Harvey Norman share price falling 7%.
It’s not surprising to see that profit has reduced – it was unlikely that the retail business was going to keep selling more and more stuff.
Good times will (probably) return. Indeed, compared to pre-COVID, these are still good times for Harvey Norman. It will be interesting to see how things develop over the next 12 months for the company.
However, I do think the overseas expansion makes a lot of sense and could achieve good earnings diversification.
There are other ASX dividend shares that I’d rather invest in for consistency and growth potential.