Has Harvey Norman Holdings Limited Continued to Show Resilience in Its Global Operations with Strong Financial Growth?
Source: Kapitales Research
Highlights:
Harvey Norman Holdings Limited (ASX: HVN) reported a 16.5% increase in profit before tax (PBT) for 1H26, reaching AU$466.31 million, driven by strong performance from Australian franchising and overseas company-operated retail segments.
A fully franked interim dividend of 14.5 cents per share was declared, reflecting a 20.8% increase compared to the previous year, showcasing confidence in future cash flow.
At the time of writing, the stock’s CMP stood at AU$5.875, down approximately 7%, as investors weighed broader market conditions and retail sector sentiment.
Strong Global Performance Drives Profit Growth
Harvey Norman Holdings Limited (ASX: HVN) has shown robust financial growth for the half-year ending 31 December 2025, with a notable 16.5% rise in profit before tax (PBT) to AU$466.31 million, compared to AU$400.29 million in 1H25. This performance is largely attributed to the continued momentum in the company’s Australian franchising operations and improved outcomes from its international retail business. Excluding the impact of AASB16 leases and property revaluations, underlying PBT grew by 20.1%, reaching AU$372.79 million.
The company’s total system sales revenue reached AU$5.16 billion, reflecting a solid 6.9% increase. Aggregated franchisee sales revenue in Australia rose by 4.8% to AU$3.50 billion, while company-operated retail sales grew by 11.6%, totaling AU$1.66 billion. This increase is largely attributed to the strategic expansion of retail stores, including new locations in Asia and Europe.
Operational Highlights and International Growth
The company’s international expansion strategy is paying off, with significant growth across New Zealand, Singapore, Malaysia, and the United Kingdom. In New Zealand, sales grew by 5.8% in AUD terms, reaching AU$516.25 million, while in Singapore, sales increased by 10.3% to AU$211.47 million. The company opened several new stores in Malaysia and Singapore, further solidifying its presence in these key markets.
In the UK, Harvey Norman’s flagship store in Merry Hill, West Midlands, showed positive momentum following its first anniversary, contributing to a 34.6% sales increase in the country, particularly driven by the Next Gen-AI technology range. The company is set to open additional stores in the UK, with plans for a second location in Sutton Coldfield slated for April 2026.
Profitability and Cost Management
Harvey Norman’s disciplined cost management strategy has continued to deliver positive results, with operating expenses as a percentage of total system sales declining to 17.8% in 1H26, down from 18.0% in 1H25. This reflects improved operating leverage, as well as flat marketing expenses despite higher system sales growth. The company’s success in controlling costs while sustaining its market presence has been a crucial element in enhancing profitability.
The franchising operations segment delivered a solid 14.2% increase in PBT, reaching AU$205.93 million, underpinned by a 4.8% rise in franchisee sales revenue to AU$3.50 billion. Additionally, Harvey Norman’s property segment saw strong performance, with a 7.8% increase in PBT, primarily driven by net revaluation increments of AU$96.26 million.
Cash Flow and Balance Sheet Strength
Harvey Norman’s balance sheet remains strong, with total assets increasing by 6.3% to AU$8.77 billion, bolstered by a solid property portfolio and earnings growth. The company also recorded strong operating cash flows of AU$392.88 million, despite a slight reduction in cash conversion compared to the previous period.
With net assets increasing to AU$4.95 billion, up 4.9% from the previous year, and a low net debt-to-equity ratio of 13.02%, Harvey Norman is in a strong position to continue executing its growth strategy and return value to shareholders. The company declared an interim dividend of 14.5 cents per share, fully franked, marking a 20.8% increase from 1H25, which emphasizes the robustness of its cash flow performance.
Looking Ahead: A Focus on International Expansion and Technology Integration
Looking forward, Harvey Norman plans to continue expanding its footprint in international markets, with additional stores planned for the UK, Malaysia, and Croatia. The company is also focusing on the ongoing integration of AI technology across its product offerings, particularly in the home, lifestyle, and tech categories.
The continued investment in digital transformation and IT infrastructure, including the roll-out of the Next Gen-AI range, positions Harvey Norman well to capture growing demand in emerging technology sectors. With a solid balance sheet and substantial cash reserves, the company is well-positioned to sustain growth and deliver strong returns to shareholders in the future.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au
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Has Harvey Norman Holdings Limited Continued to Show Resilience in Its Global Operations with Strong Financial Growth?
Highlights:
Strong Global Performance Drives Profit Growth
Harvey Norman Holdings Limited (ASX: HVN) has shown robust financial growth for the half-year ending 31 December 2025, with a notable 16.5% rise in profit before tax (PBT) to AU$466.31 million, compared to AU$400.29 million in 1H25. This performance is largely attributed to the continued momentum in the company’s Australian franchising operations and improved outcomes from its international retail business. Excluding the impact of AASB16 leases and property revaluations, underlying PBT grew by 20.1%, reaching AU$372.79 million.
The company’s total system sales revenue reached AU$5.16 billion, reflecting a solid 6.9% increase. Aggregated franchisee sales revenue in Australia rose by 4.8% to AU$3.50 billion, while company-operated retail sales grew by 11.6%, totaling AU$1.66 billion. This increase is largely attributed to the strategic expansion of retail stores, including new locations in Asia and Europe.
Operational Highlights and International Growth
The company’s international expansion strategy is paying off, with significant growth across New Zealand, Singapore, Malaysia, and the United Kingdom. In New Zealand, sales grew by 5.8% in AUD terms, reaching AU$516.25 million, while in Singapore, sales increased by 10.3% to AU$211.47 million. The company opened several new stores in Malaysia and Singapore, further solidifying its presence in these key markets.
In the UK, Harvey Norman’s flagship store in Merry Hill, West Midlands, showed positive momentum following its first anniversary, contributing to a 34.6% sales increase in the country, particularly driven by the Next Gen-AI technology range. The company is set to open additional stores in the UK, with plans for a second location in Sutton Coldfield slated for April 2026.
Profitability and Cost Management
Harvey Norman’s disciplined cost management strategy has continued to deliver positive results, with operating expenses as a percentage of total system sales declining to 17.8% in 1H26, down from 18.0% in 1H25. This reflects improved operating leverage, as well as flat marketing expenses despite higher system sales growth. The company’s success in controlling costs while sustaining its market presence has been a crucial element in enhancing profitability.
The franchising operations segment delivered a solid 14.2% increase in PBT, reaching AU$205.93 million, underpinned by a 4.8% rise in franchisee sales revenue to AU$3.50 billion. Additionally, Harvey Norman’s property segment saw strong performance, with a 7.8% increase in PBT, primarily driven by net revaluation increments of AU$96.26 million.
Cash Flow and Balance Sheet Strength
Harvey Norman’s balance sheet remains strong, with total assets increasing by 6.3% to AU$8.77 billion, bolstered by a solid property portfolio and earnings growth. The company also recorded strong operating cash flows of AU$392.88 million, despite a slight reduction in cash conversion compared to the previous period.
With net assets increasing to AU$4.95 billion, up 4.9% from the previous year, and a low net debt-to-equity ratio of 13.02%, Harvey Norman is in a strong position to continue executing its growth strategy and return value to shareholders. The company declared an interim dividend of 14.5 cents per share, fully franked, marking a 20.8% increase from 1H25, which emphasizes the robustness of its cash flow performance.
Looking Ahead: A Focus on International Expansion and Technology Integration
Looking forward, Harvey Norman plans to continue expanding its footprint in international markets, with additional stores planned for the UK, Malaysia, and Croatia. The company is also focusing on the ongoing integration of AI technology across its product offerings, particularly in the home, lifestyle, and tech categories.
The continued investment in digital transformation and IT infrastructure, including the roll-out of the Next Gen-AI range, positions Harvey Norman well to capture growing demand in emerging technology sectors. With a solid balance sheet and substantial cash reserves, the company is well-positioned to sustain growth and deliver strong returns to shareholders in the future.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au