Free audio stream, including stories that are padlocked on our site. Listen on any device, anywhere. Updated twice daily. The audio stream takes several seconds to start on Android devices.Launch Radio player
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.