JB Hi-Fi posts record results, Uechtritz to step down: Economy Roundup

Electronics and entertainment retailer JB Hi-Fi has posted record results for the first half of the 2010 financial year, with net profit up 29% to $76 million.

But the company also announced chief executive Richard Uechtritz would step down from his position in July or August of this year, to be replaced by current chief operating officer Terry Smart.

The company said sales had increased 23% to $1.5 billion, up from $1.2 billion, while comparable store sales growth was up by 10.2% in Australia and 5.8% in New Zealand.

The company also reaffirmed its guidance of a 20% increase in annual sales to $2.8 billion, with full year net profit after tax expected to be $117 million to $120 million. It also confirmed it had opened 15 new stores during the first half of 2010, with seven more expected in the next six months.

Uechtritz said he was “extremely pleased” with the results. “JB has proven to be very resilient throughout the economic downturn which led to low consumer confidence and spend,” he said in a statement.

“We continue to grow our market share as recently opened stores mature, we open new stores, expand our offering and reduce our prices on the back of increased economies of scale and a continued focus on costs.”

But he also said it was time for him to step down, with chairman Patrick Elliot saying Smart’s succession had been planned for some time.

“His knowledge of the business is second to none and the board is confident in Terry’s ability to continue executing the company’s growth strategy,” Elliott said.

Meanwhile, unions are pushing for an increase in the minimum wage when the Australian Fair Pay Commission meets next month.

Australian Council of Trade Unions secretary Jeff Lawrence told ABC Radio this morning the unions would be seeking an increase, but not necessarily within the $30-40 range.

“I’m not saying that is the amount, but we’re talking about… a moderate stimulus to people’s purchasing power,” he said, also saying he did not believe the increase would be above $21 per week, the rate at which the minimum wage was frozen in July last year.

“There’s no reason why minimum wage-earners… should be disadvantaged,” he said.

Shares open higher after disappointing week

The Australian sharemarket has opened slightly higher today following a disappointing week on Wall Street, where stocks fell due to fears the labour market will cripple the country’s economic recovery.

The benchmark S&P/ASX200 index was up 33 points or 0.73% to 4547.2 at 12.10 AEST, while the Australian dollar remained steady at US86c.

ANZ shares declined 0.6% to $20.77, while Commonwealth Bank shares increased by 0.6% to $53.00. Westpac shares fell 0.8% to $22.44, while NAB shares lost 0.6% to $25.17.

As reported in The Australian, mining giant Rio Tinto was prepared to sell Chinalco a 19.9% stake in its iron ore operations and up to 45% of the business itself under a $40 billion deal in 2008.

The publication reported that documents indicated Rio investigated the deal in order to solve its debt problems. The company drafted a letter to the Foreign Investment Review Board, but it is understood this letter was not sent.

Also in the mining industry, BHP Billiton has appointed Chris Campbell as president of its iron ore business, with current president Ian Ashby now set to become chief executive of the company’s joint venture with Rio Tinto in Western Australia.

“Chris’ previous roles across marketing and operational areas of the industry and his deep history within the group will be invaluable in his new position leading the iron ore business,” BHP ferrous and coal chief executive Marcus Randolph said in a statement.

“I am delighted to have Chris on the team and believe that this structure will give additional focus to our non-Western Australia iron ore assets.”

Incitec Pivot flags ammonium nitrate plant construction

Explosives supplier Incitec Pivot has said construction of the $935 million ammonium nitrate plant in central Queensland will recommence in May 2010.

The company had previously said the project would be delayed due to the global financial crisis, with only about 35% of the overall project complete. However, it said today the plant is scheduled to begin operating in the first quarter of the 2012 calendar year.

“This project fits with our strategy of aligning our business to the industrialisation of Asia and leverages our core nitrogen-manufacturing capability,” chief executive James Fazzino said in a statement.

“This will be a world-scale manufacturing plant at the bottom of the cost curve in its market and meets our financial criteria, achieving 18% return on net assets in the third full year of operation.”

Overseas, US treasury secretary Tim Geithner has attempted to dismiss concerns that the United States Government could lose its triple-A credit rating.

“Absolutely not,” he said to suggestions the country’s rising debt could impact the country’s credit rating. “That will never happen to this country.”

“I think we have much, much lower risk of that today than at any time over the last 12 months or so.”