Highlights

• Harvey Norman reported FY26 pre-tax profit of $790.29 million, up 4.9%, on system sales of $9.64 billion.

• Established international operations, excluding the UK, lifted pre-tax profit 25.2% to $166.93 million, with New Zealand contributing $85.12 million.

• The board declared a 13.0 cent fully franked final dividend, lifting the full-year payout to 27.5 cents per share.

• Net debt rose to $940.87 million from $658.52 million, while net debt-to-equity reached 18.81% and operating cash flow fell 22.6%.

A higher-earning first half and a lower-earning second half left Harvey Norman Holdings Limited (ASX:HVN) with higher full-year profit and a cooler start to FY27. Reported profit before tax rose 4.9% to $790.29 million for the year ended 30 June 2026. Shares were trading at A$4.17 on 23 October 2026, up 3.22%.

A Year of Two Halves

The split was stark. First-half profit before tax rose 16.5%, then fell 8.2% in the second half as geopolitical tensions, inflation and cautious consumers weighed on trading in Australia and several overseas markets.

Excluding lease accounting, property revaluations and a pecuniary penalty, profit before tax was $654.69 million, up 10.9%. Profit after tax and non-controlling interests was $528.46 million, up 2.0%, or $437.81 million on the same adjusted basis, up 8.6%.

The penalty stems from ASIC proceedings. The Federal Court ordered a $35 million pecuniary penalty on 28 July 2026, of which $18.80 million was recognised in FY26 and $16.2 million in earlier years.

System sales reached $9.64 billion, up 3.1%. Aggregated Australian franchisee sales were $6.584 billion, up 2.4%, and company-operated sales were $3.052 billion, up 4.5%.

Overseas Stores Carry the Growth

Franchising profit before tax was $345.18 million, up 0.2%, with the margin easing to 5.24% from 5.36%.

Property earned $333.49 million, up 3.7%, including $156.75 million of net revaluation gains. Without revaluations, profit rose 5.7% to $176.74 million. The freehold portfolio stood at $4.80 billion.

Overseas retail delivered the sharpest gains. Established international operations, excluding the UK, earned $166.93 million, up 25.2%. New Zealand contributed $85.12 million, up 31.2%, and Ireland $30.84 million, up 36.2%. The UK, still in expansion mode with four stores, lost $31.21 million, though its sales rose 39% to 26.42 million pounds.

Balance Sheet and Dividends

Net assets rose 2.0% to $4.94 billion. Operating cash flow fell 22.6% to $537.22 million, and net debt climbed to $940.87 million from $658.52 million, lifting net debt-to-equity to 18.81% from 13.43%.

Shareholders received a 14.5 cent interim dividend and will receive a 13.0 cent final dividend, both fully franked, for a total of 27.5 cents against 26.5 cents in FY25. The final dividend had a record date of 7 October 2026 and is payable on 12 November 2026.

July Dip and the Store Pipeline Ahead

Early FY27 trading was uneven. In July 2026, Australian franchisee sales fell 3.4% on both a total and comparable basis. Comparable written sales for 1 to 24 August 2026 rose 3.8%. Management linked July's softness partly to the timing of product launches and to state elections in Malaysia. The company gave no formal FY27 earnings forecast, and the board said it was optimistic about future trading while flagging macroeconomic, cyber, competition and property-value risks.

Expansion plans continue. In Australia, the company intends one new franchised complex, four relocations and four refits in FY27. In the UK, a third West Midlands site is in final lease negotiations for a 2027 opening. Land has been acquired in East Zagreb for a Croatian flagship expected in 2028; leases are signed for three Malaysian stores and one Singapore store in FY27.

Key dates include the annual general meeting on 25 November 2026 and the half-year result on 26 February 2027.