Exclusive: Harvey Norman NZ profit jumps on property gain
Harvey Norman's New Zealand operations reported a substantial increase in earnings for the financial year ending June 30, 2025, largely due to higher valuations across its domestic investment property portfolio. Net profit grew to NZD $47.1 million from NZD $9.9 million the previous year, although revenue increased slightly to NZD $64.9 million due to higher management fees and rental income. The findings demonstrate that the financial success of the New Zealand branch is closely linked to changes in local commercial property values.
Profit before income tax climbed to NZD $55.7 million from NZD $18.0 million in the previous year. The increase came after a disappointing 2024 result, when unfavourable property revaluations weighed strongly on earnings.
Revenue base
Revenue grew to NZD $64.9 million, up from NZD $62.0 million the year before. Management fees totalled NZD $17.5 million, essentially steady with the previous period. Rental income and outgoings recovered from tenants increased to NZD $39.9 million from NZD $37.9 million in 2024.
Dividend income fell to NZD $1.1 million from NZD $1.4 million, but interest income climbed to NZD $6.4 million. The revenue profile reflects the structure of the New Zealand firm, with income primarily from property ownership and administration rather than from direct retailing.
Property gains
The main contribution to the earnings increase was a net revaluation gain on investment properties of NZD $24.7 million. This contrasts with a net revaluation loss of NZD $13.0 million in the prior year.
Investment properties were worth NZD $518.1 million at the end of the year, up from NZD $487.5 million at the start. The portfolio comprised seven properties across New Zealand, the majority of which were large-format retail locations linked to the Harvey Norman store network.
The swing in values has a material influence on profits and equity.
Cost structure
Operating expenses remained relatively consistent year after year. Rent and outgoings rose to NZD $8.7 million from $8.1 million. Employee perks increased to NZD $0.5 million, from NZD $0.46 million in 2024. Depreciation expenses climbed slightly, reaching NZD $0.38 million.
Other expenses amounted to NZD $20.2 million, up from $19.5 million. Finance costs increased to NZD $6.8 million from NZD $5.6 million, driven by higher interest on borrowings and leasing liabilities.
Joint venture
The New Zealand company held a 50% stake in Auckland's Westgate Lifestyle Centre. The joint business increased profit by NZD $2.8 million from NZD $3.0 million the previous year. The asset remains a significant portion of the company's domestic property exposure.
Balance sheet
Total assets climbed to NZD $915.6 million on June 30, 2025, from NZD $823.1 million the previous year. Non-current assets totalled NZD $901.0 million, reflecting higher property valuations and an increase in related party receivables.
Total liabilities increased to NZD $327.9 million from $290.2 million. Interest-bearing loans and borrowings totalled NZD $269.4 million in both current and non-current categories.
Net assets increased to NZD $587.7 million from NZD $532.8 million in 2024. Retained earnings increased to NZD $552.2 million.
Cash flows
Net operating cash flows were neutral during the year. Management fees totalling NZD $15.7 million were offset by management fees of the same amount. Cash and cash equivalents were limited, leaving them at zero at year-end.
The cash flow profile reflects the entity's position as a property-holding and management company in New Zealand, rather than as a cash-generating retail operator.
Local exposure
The 2025 outcome demonstrates that the financial health of Harvey Norman Limited's New Zealand division remains closely linked to domestic commercial property conditions. While revenue swings were minor, changes in property valuations continued to have a significant influence on earnings, making profitability more susceptible to shifts in the local property market than to retail selling alone.