JB Hi-Fi's NZ earnings drop 50pc on flat sales

BusinessDesk

10 Aug, 2015 12:00 AM2 mins to read

JB Hi-Fi's New Zealand earnings dropped to $1.6 million in the 12 months ended June 30 from $3.1 million a year earlier, with sales edging down 0.1 percent to $211.4 million. Photo / Greg Bowker

JB Hi-Fi's New Zealand earnings halved in the latest financial year as the Australian discount consumer electronics retailer's margins shrank and sales were little changed.

New Zealand earnings before interest and tax dropped to $1.6 million in the 12 months ended June 30 from $3.1 million a year earlier, with sales edging down 0.1 per cent to $211.4 million, the Melbourne-based company said in a statement.

Ebit margins almost halved to 0.74 percent, even as the local unit fattened its gross margins on improved buying terms.

The New Zealand unit's performance lagged behind the wider group, which reported net profit rose 6.4 per cent to A$136.5 million on a 4.8 per cent increase in sales to A$3.65 billion.

The company anticipates sales of about A$3.85 billion in the 2016 financial year.

"It was pleasing to see our sales and earnings momentum growth through the financial year," chief executive Richard Murray said.

"Trading in June was particularly strong as we cycled a soft trading period in the prior year and enjoyed the benefits of solid sales growth assisted by the small business tax incentives."

JB Hi-Fi is still expanding its footprint in New Zealand, where it has 14 stores compared to 173 in Australia. It plans to open six new sites in 2016, one of which will be in New Zealand.

In recent years, New Zealand's consumer electronics market has been characterised by vigorous competition and cheap imports driving down prices.

Government data shows the volume of retail spending on electrical and electronic goods rose 19 per cent in the year ended March 31, while the value rose a more modest 7.8 per cent.

JB Hi-Fi's board declared a final dividend of 31 Australian cents per share, payable on September 11, taking the annual payout to 90 cents. The company will also undertake an on-market share buyback of up to 776,610 shares, or 0.8 per cent on issue, which it estimates will cost A$15.2 million.