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Defying downturn, Australia's JB Hi-Fi posts rising profit
[SYDNEY] Australian electronics retailer JB Hi-Fi Ltd bucked gloomy sales conditions to post a 5.5 per cent 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.
Instead, JB Hi-Fi - which is also seen as vulnerable to competition from online e-commerce giant Amazon.com Inc - sounded a note of optimism with rising sales in Australia, New Zealand and its separate whitegoods division.
"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 per cent in early trade to a six-week high, before easing back to trade 4 per cent over Friday's close, while the broader market rose 0.15 per cent.
The company posted net profit for the six months to Dec. 31 of A$160.1 million (S$154.6 million), compared to A$151.7 million in the same period a year earlier. Revenue rose 4.2 per cent to A$3.8 billion.
It lifted its interim dividend almost 6 per cent 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 per cent 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.