HY21 result: Is Harvey Norman (ASX:HVN) a solid ASX dividend share?

Harvey Norman Holdings Limited (ASX: HVN) reported its FY21 half-year result on Friday, is it a solid ASX dividend share?

What did Harvey Norman report in HY21?

Firstly, it’s important to know that Harvey Norman has stores across a number of other countries, not just Australia, including New Zealand, Malaysia, Singapore, Republic of Ireland, Northern Ireland, Slovenia and Croatia.

On to the results.

Offshore company-operated Harvey Norman retail sales grew by 21.8% to $1.36 billion, with comparable sales of 16.9%. Total headline franchisee sales revenue (which aren’t included in the company’s financial accounts) saw growth of 27.3% to $3.76 billion. That means that total aggregated company-operated and franchisee sales revenue grew by 25.8% to $5.12 billion.

Harvey Norman reported that its EBITDA (EBITDA explained) rose by 76% to $779.84 million. Reported profit before tax (PBT) grew by 113.8% to $643.91 million, whilst underlying PBT was up 113.5% to $610.22 million.

The statutory net profit after tax grew by 116.3% to $462.03 million.

Management comments

Harvey Norman Chairman Gerry Harvey said: “The solid results delivered this half is a testament to the strength and resilience of the integrated retail, franchise, property and digital strategy and its ability to adapt and transform to the changing retail landscape and continue to navigate the uncertainties presented by COVID-19. 

The robust cash flows generated from operating activities of over $391 million dollars this half has enabled us to invest in our businesses and pay down external debt. At 31 December 2020, the consolidated entity had $499 million of unused, available financing facilities, and is well placed to respond to challenges and capitalise on opportunities as they arise.”

Is it a solid ASX dividend share?

Well, the rest of FY21 looks good with aggregated sales revenue for 1 January 2021 to 23 February 2021 increasing by 21% compared to the prior corresponding period.

The last year was obviously filled with the uncertainties of COVID-19, so the company only paid a dividend of $0.24 per share for the whole of the calendar year.

In this result the board decided to declare a dividend of 20 cents per share. CommSec has estimated that Harvey Norman could pay a dividend of $0.33 per share for FY21, which would translate to a fully franked dividend yield of 6.3% at the current share price.

Harvey Norman has been a solid business over the last few years, and it’s delivering impressive results right now. I just wonder if the online and international growth will be enough to offset the likely, but not definite, medium-term difficulties for the physical store network.

I’m glad Harvey Norman is doing well, and it will probably keep paying good dividends for the foreseeable future, but there are other ASX dividend shares I’d rather think about which appear more defensive.

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At the time of publishing, the author of this article does not have a financial or commercial interest in any of the companies mentioned.

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