Harvey Norman shares rose nearly 5% in yesterday’s weak market after it surprised with a very rare profit estimate before the end of the financial year.
The shares ended up 4.9% to $3.62 after the company announced a measure of earnings would be up around 20%.
“Unaudited preliminary accounts for the period 1 July 2019 to 31 May 2020 indicate profit before tax and non-controlling interests, but excluding AASB16 Leases net impact and net property revaluation adjustments, for the consolidated entity, was an increase of approximately 20% compared to the prior corresponding period,” the key part of the statement read.
There’s an important qualifier in that statement – it’s excluding … net property revaluation adjustments, for the consolidated entity. Harvey Norman owns many of its shopping centres and judging by warnings and cuts to valuations from GPT (for its shopping centre interests), Vicinity Centres and this week from Stockland for its regional malls, the company will be reporting valuation cuts in its June 30 results in August.
Whether they (and the lease changes) are enough to wipe out the 20% rise mentioned in Tuesday’s statement will be the key point from that August 28 announcement.
Earlier this month, the company reported a 17.5% jump in sales from the start of January to the end of May as consumers spent up big to improve their homes during the pandemic lockdown.
The January-May improvement has pushed financial year (June 30) to date sales growth to 7.4%.
That is a big improvement on Harvey Norman’s sales in the December half, which grew by just 0.1%.
Harvey Norman said that in light of this surge it will pay a fully franked special dividend of 6 cents a share on June 29 to any shareholder registered by June 23.
The company had previously canceled its 12 cents interim dividend in early April to preserve cash amid the virus uncertainty. The latest dividend delivered a $23.5 million payment to major shareholder Gerry Harvey.
