02 Feb 2015
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JB Hi-Fi NZ earnings slump, while Australian market lifts

By Pattrick Smellie

JB Hi-Fi's New Zealand sales and earnings fell in the first half of the financial year in what the Australian discount consumer electronics chain says is a "very competitive" market.

New Zealand earnings before interest and tax dropped to $2.5 million in the six months ended Dec. 31 from $2.7 million a year earlier, as sales declined 4.3 percent to $113 million, the Melbourne-based company says in a statement. That lagged behind the company's dominant Australian segment, which lifted sales 1.4 percent to A$1.86 billion, while Ebit fell 2.1 percent to A$127.7 million.

The decline in New Zealand sales was "driven primarily by cycling digital switchover in the pcp (prior corresponding period)," it said in presentation notes released to the ASX. "We expect the market in both Australia and New Zealand to remain very competitive in the second half."

JB Hi-Fi reported a 1.9 percent decline in profit across the group to A$88.5 million, while revenue rose 1.3 percent to A$1.97 billion. The group anticipates annual profit to be between A$127 million and A$131 million on sales of about A$3.6 billion.

In recent years New Zealand's consumer electronics market has been characterised by tight competition and cheap imports driving down prices. Government data shows consumer prices for telecommunication equipment fell 30 percent in calendar 2014, while audio visual equipment prices were down 14 percent.

New Zealand retailers such as JB Hi-Fi got a brief boost in 2013 when the government completed its plan to switch off the analogue network for television, freeing up radio spectrum for mobile phone carriers and meaning consumers needed to buy a set-top box or upgrade their set to access TV on the digital transmission.

JB Hi-Fi is still building its presence in New Zealand with 14 stores as at Dec. 31, and plans to open another store in the second half of the 2015 financial year.

The company's board declared an interim dividend of 59 Australian cents per share, payable on Feb. 27 with a record date of Feb. 13.

The ASX-listed shares gained 5 percent to A$17.58, and have advanced 6.1 percent this year.

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