Legal Risks Loom as JB Hi-Fi Posts Solid Profit Growth and Raises Dividend

• Revenue increased 9.9% to $5.67 billion
• Net profit attributable to owners rose 8.1% to $285.4 million
• Interim dividend declared at 170 cents per share, fully franked
• Acquisition of e&s contributed $92.3 million revenue and $1 million profit
• Group maintains strong cash position with $556.4 million cash on hand

Strong Half-Year Growth Amid Strategic Expansion

JB Hi-Fi Limited has delivered a solid financial performance for the half-year ended 31 December 2024, reporting a 9.9% increase in revenue to $5.67 billion and an 8.1% rise in net profit attributable to owners, reaching $285.4 million. This growth reflects the company’s continued strength in the consumer electronics retail sector, supported by robust sales across its core brands and channels.

The company’s earnings per share also improved, with basic earnings per share rising to 261.1 cents, up from 241.8 cents in the prior corresponding period. This performance underscores JB Hi-Fi’s operational efficiency and effective cost management despite ongoing competitive pressures.

Segment Contributions and Acquisition Impact

Segment reporting reveals that JB Hi-Fi Australia remains the largest contributor, generating $3.88 billion in revenue and delivering an EBIT of $316.5 million. JB Hi-Fi New Zealand and The Good Guys also posted solid results, while the newly acquired e&s business contributed $92.3 million in revenue and $1 million in net profit since its acquisition in September 2024.

The acquisition of e&s, a premium supplier in kitchen, laundry, and bathroom products, complements JB Hi-Fi’s existing portfolio by expanding its customer base and product offering. The Group paid $47.7 million for a 75% stake, with options to acquire the remaining 25% in 2029. Goodwill arising from the acquisition was provisionally valued at $32.6 million, reflecting anticipated synergies and growth opportunities.

Dividend and Financial Position

Reflecting confidence in its financial health, JB Hi-Fi declared an interim dividend of 170 cents per share, fully franked at the 30% corporate tax rate, payable on 7 March 2025. This follows a final dividend of 103 cents per share for the previous financial year, highlighting a strong commitment to returning value to shareholders.

The Group’s balance sheet remains robust, with cash and cash equivalents increasing to $556.4 million and total assets rising to $4.17 billion. Net tangible assets per security improved to $4.36, up 8% from the prior year. The company’s available borrowing facilities total $281.4 million, providing ample liquidity for ongoing operations and strategic initiatives.

Legal Proceedings and Outlook

JB Hi-Fi is currently defending two legal proceedings: a class action related to the sale of extended warranties and ACCC proceedings concerning store credit promotions by The Good Guys. While the outcomes remain uncertain, the company has not identified any material impact on its financial position at this stage.

Looking ahead, JB Hi-Fi’s performance in the first half of the financial year, traditionally the stronger trading period due to seasonal events like Black Friday and Christmas, sets a positive tone. However, the company has not provided explicit forward guidance, leaving investors to watch closely for market signals and strategic developments.

Bottom Line?

JB Hi-Fi’s strong half-year results and strategic acquisition position it well, but legal challenges and market dynamics warrant close investor attention.

Questions in the middle?

• How will JB Hi-Fi integrate and grow the e&s business over the next five years?
• What potential financial impact could arise from the ongoing class action and ACCC proceedings?
• Will JB Hi-Fi maintain or increase its dividend payout amid evolving market conditions?