Harvey Norman reports mixed Financial Results for FY2024

Harvey Norman Stores (N.Z.) Pty Limited has released its financial results for the year ending 30 June 2024, highlighting a challenging yet resilient performance amidst fluctuating market conditions.

Revenue Decline and Profitability
The company reported total sales revenue of $1.05 billion, a decline of 6.1% compared to $1.12 billion in the prior year.

This drop in revenue was accompanied by a decrease in gross profit, which stood at $341.2 million, down from $362.6 million in FY2023.

The reduction in gross profit reflects ongoing pressures in consumer spending and a competitive retail landscape.

Despite the decline in revenue, the company achieved a net profit of $33.4 million, though this figure was notably lower than the $45.9 million posted in the previous year.

The profit was influenced by a combination of lower revenue and increased occupancy expenses, which rose to $52.7 million from $49.7 million.

Expense Management and Key Investments
Efforts to streamline operational costs were apparent, with administrative expenses decreasing from $58.4 million in FY2023 to $56.5 million in FY2024. However, selling and distribution expenses remained stable at approximately $156.5 million.

Noteworthy investments included significant capital expenditure on property, plant, and equipment. The company allocated $60.1 million in this area, reflecting a commitment to infrastructure improvements and modernisation. Additionally, the value of right-of-use assets increased to $201.2 million from $186.1 million, indicating growth in leased assets to support operations.

Stronger Financial Position
Harvey Norman New Zealand closed the fiscal year with a strengthened balance sheet. Total assets rose to $625.6 million, compared to $574.6 million in FY2023.

The increase was driven by a rise in cash and cash equivalents, which more than doubled to $22.9 million from $12.2 million, and a $13.5 million increase in property, plant, and equipment.

The company's net assets grew significantly to $130.2 million, up from $96.9 million in the previous year, driven by retained earnings and capital growth. This improvement reflects robust financial management amid external economic challenges.

Cash Flow Performance
The company reported net cash flows from operating activities of $81.7 million, an increase from $75.7 million in the prior year. This was primarily attributed to controlled supplier payments and consistent customer receipts. However, cash flows from investing activities remained negative, with an outflow of $58.4 million, reflecting ongoing investment in property and equipment.

Looking Ahead
The directors of Harvey Norman New Zealand expressed cautious optimism about the future, citing stable demand for consumer goods and continued efforts to adapt to market conditions.

They acknowledged the challenges of FY2024, including reduced consumer spending and higher borrowing costs, but reiterated the company's resilience and strategic positioning.

With no significant events reported post-balance date, the company appears well-positioned to navigate the upcoming fiscal year. Directors affirmed their commitment to sustainable growth and operational efficiency as key priorities.

Conclusion
The FY2024 results underline Harvey Norman New Zealand's ability to sustain profitability and strengthen its financial position despite facing headwinds in the retail sector.

While challenges persist, the company's focus on operational discipline and investment in key assets suggests a measured approach to achieving long-term stability and growth.