Stocks

Defying downturn, Australia's JB Hi-Fi posts rising profit

Reuters

By Tom Westbrook

SYDNEY, Feb 11 () - Australian electronics retailer JB Hi-Fi Ltd bucked gloomy sales conditions to post a 5.5 percent rise in half-year profit and growth in categories from fridges to phones, sending its shares to a six-week high.

Australia's retailers had their worst quarter in a year in the three months to December and investors had been bracing for a downturn in property prices, which tends to make consumers save more and spend less, to sink sales further.

"It looks OK - it's been far more resilient, this business, than anyone thought," said Nathan Bell, head of Australian equities at InvestSmart. "I just don't think things are as bad out there as what they are made out."

Shares in JB Hi-Fi jumped as much as 7 percent in early trade to a six-week high, before easing back to trade 4 percent over Friday's close, while the broader market rose 0.15 percent.

The company posted net profit for the six months to Dec. 31 of A$160.1 million ($114 million), compared to A$151.7 million in the same period a year earlier. Revenue rose 4.2 percent to A$3.8 billion.

It lifted its interim dividend almost 6 percent to A$0.91.

House prices in Australia have posted their sharpest falls in a generation, spurring a plunge in the construction outlook and weighing on consumer spending.

That has prompted building supplier Boral Ltd to trim its earnings outlook, a precipitous drop in profit at developer AVJennings, and pushed overall national retail sales last quarter to their lowest in a year.

JB Hi-Fi said in a statement that the Christmas quarter was particularly volatile, with discounts driving sales, and added that sales growth had since slowed in January.

Nevertheless half-year sales at its previously underperforming home appliances business, The Good Guys, rose 2.8 percent to A$1.13 billion even though some analysts had seen it as particularly vulnerable to a property downturn.

The company held its annual revenue outlook at A$7.1 billion, which it had announced last August, but forecast a second-half profit slowdown with total profit projected at between A$237 million and A$245 million.

($1 = 1.4088 Australian dollars)


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