Harvey Norman full-year profit up 8%: Economy Roundup

Retail giant Harvey Norman has recorded an 8% increase in full-year net profit to $231.4 million, up from $214.4 million from the previous corresponding period.

The company said underlying profit rose 15.8% to $290 million, and said it is optimistic about the rest of the year given consumer sentiment appears to be rising.

“The outlook for 2010/11 looks promising. We believe we are going into a period of full employment, low interest rates and homes with good balance sheets, and the property market has held up very well,” chairman Gerry Harvey said in a statement.

“Once the outcome of the federal election is announced, the boxes are ticked for consumer sentiment to roar. We believe looking forward that it will be a pretty good 12 months.”

The company said franchisee sales rose from $5.06 billion to $5.19 billion, while EBIT rose from $382.95 million to $420.1 million.

Harvey also noted the 29 Clive Peeters and Rick Hart stores should deliver solid growth as part of the roll-out over the next year, and should provide strong revenue growth.

“We believe we can significantly grow revenue from these complexes, by utilising the skill sets of each of Harvey Norman and Clive Peeters,” Harvey said.

“Clive Peeters and Rick Hart are extremely strong in whitegoods and cooking, but weaker in the Audio Visual and IT categories, while Harvey Norman specialises in AVIT and is a leader in bringing new technologies such as 3D to market.”

In the mining sector, Lihir Gold has recorded a net profit of $US87 million for the six months to 30 June, following from a $US301 million loss in the previous corresponding period.

Underlying profit was down 15% to $US142.5 million with revenue also down 2% to $US544.9 million. In a statement, the company said mine operating EBITDA was down 9% to $US316.8 million.

Today in Perth, Myer chief executive Bernie Brooks has expressed his disappointment regarding the company’s decision to list on the ASX, with The Age saying he preferred operating under private equity.

”I think it is unfortunate that private equity has been tarred with the number of brushes that I think are quite unjust,” he has been reported as telling the briefing. ”The private companies that I’ve worked for, or had the opportunity to view, have run the business the way it should be run.

”The reality is our management team spend an excessive amount of time managing and talking to a multiple number of investors, a lot of time with analysts to the market.

”Managing a large number of shareholders is like herding cats. You’ve got a large diversity of shareholders, all with different needs. It’s a lot simpler when you’ve got one owner who owns 82% of the business and is quite happy each week to have a half hour update on how their investment is going.”

Australian shares fall after Wall Street disappoints

The Australian sharemarket has opened lower this morning, following a disappointing night on Wall Street where stocks fell below 10,000 points.

The benchmark S&P/ASX200 index was down nine points or 0.22% to 4346.5 at 12.15 AEST, while the Australian dollar opened slightly lower to US88c.

AMP shares lost 0.4% to $4.93, while Commonwealth Bank shares also fell 0.2% to $48.89. Westpac fell 0.5% to $2.145 as NAB shares lost 0.7% to $22.84.

Scrap metal recycler Sims Metal Management has recorded a net profit of $126.7 million for the year to 30 June, following on from a 2009 loss of $150.3 million.

The company announced underlying profit fell by 14.5% to $147 million, with EBITDA up by 36% to $352.9 million.

“Ferrous scrap flows remain weak in North America and Europe, due in part to uncertain economic conditions and oppressive heat that has persisted for most of their summer,” Sims said in a statement.

“Demand for ferrous scrap remains lukewarm as steel mills attempt to match raw material inventories closely with sales and production visibility.”

Chief executive Daniel Dienst said the results were good despite a challenging economic environment.

Rio Tinto warns on economic outlook

Rio Tinto chief executive Tom Albanese has told an Australian Institute of Company Directors lunch the global economic outlook is still uncertain.

“Uncertainties do cloud the sector’s short-term horizon such as the implications of continuing global economic instability, resource rents and climate change,” he said in his speech.”

“The potential for long term growth remains strong if the right decisions for the future are made now.”

Meanwhile, Fortescue Metals reported a 14% increase in annual net profit last night to $US581 million, with total iron ore shipments up 44% to 40.1 million tonnes.

“The 2010 financial results mark a turning point for Fortescue as the company delivers strong cashflow after years of project development,” chief executive Andrew Forrest said in a statement.

“Production and price increases are generating significant revenues and increasing cash balances…This is a great result for our shareholders.”

In the United States, Wall Street stocks fell after economists predicted a major downgrade in second-quarter GDP. The Dow Jones Industrial Average fell 74.25 points or 0.74% to 9,985.81.