Earnings slide at Michael Hill as $53m tax credit rescues profit

Declining revenues in New Zealand and Canadian markets have taken the shine off a profit boosted by tax credits at jeweller Michael Hill International.

Tax credits linked to a restructure transferring intellectual property to the company’s Australian subsidiary boosted the company’s net profit by 237% to $65.6 million for the six months to December 31, 2008.

But net profit before tax was down 37% to $17.9 million.

Overall operating revenue was up 8.5% to $226.97 million, but margins were hurt by the fall in the Australian/US exchange rate.

Earnings before interest and tax (ebit) was down 30.8% to $21.3 million.

Directors say the group’s balance sheet remains sound, with an equity ratio of 55% as at December 31.

Retail revenue from the New Zealand market dropped 7.6% to $49.6 million for the six months with ebit dropping 24.8% to $6.8m.

The Australian market was more resilient, increasing revenue 4.7% to $A125m for the six months with ebit down 1.4% to A$15.5m.

Canadian revenue rose 3.5% to $C13.9m but the segment recorded a $C444,000 operating loss in difficult trading conditions.

United States trading was also difficult but Michael Hill directors said they were confident acquisitions in the country were still a good opportunity for the future.

On revenue of $US4.09m for the four months, the division made an operating loss of $US1.4m.

Store growth may slow over the next year as the company says it will be more choosey about taking up opportunities.

Got a question about this story? Leave it in Comments & Questions below.

This article is tagged with the following keywords. Find out more about MyNBR Tags

Comments & Questions

Commenter icon key: Subscriber Verified

Post New comment or question

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

NZ Market Snapshot


Sym Price Change
USD 0.6591 0.0062 0.95%
AUD 0.9118 0.0046 0.51%
EUR 0.6243 0.0083 1.35%
GBP 0.4379 0.0040 0.92%
HKD 5.1095 0.0467 0.92%
JPY 81.2320 1.0830 1.35%


Commodity Price Change Time
Gold Index 1065.8 9.600 2015-11-30T00:
Oil Brent 45.2 -0.320 2015-11-27T00:
Oil Nymex 41.6 -0.120 2015-11-30T00:
Silver Index 14.1 0.040 2015-11-30T00:


Symbol Open High Last %
NZX 50 6107.5 6124.2 6100.1 0.35%
NASDAQ 5139.6 5141.4 5127.5 -0.37%
DAX 11268.3 11430.9 11293.8 0.78%
DJI 17802.8 17837.2 17798.5 -0.44%
FTSE 6375.1 6387.1 6375.1 -0.30%
HKSE 21974.8 22195.2 22068.3 -0.33%
NI225 19799.1 19892.4 19747.5 0.70%