JB Hi-Fi FY24 Results and Strategic Acquisition of e&s
JBH (JBH) Share Update August 2024 Sunday 11th
JB Hi-Fi Reports Mixed FY24 Results and Announces Acquisition of e&s
JB Hi-Fi Limited has announced its FY24 financial results, revealing a mixed performance across its business segments. Additionally, the company has entered into an agreement to acquire e&s, a premium home appliance retailer.
Instant Summary:
- Total sales decreased by 0.4% to $9.59 billion.
- Net profit after tax fell by 16.4% to $438.8 million.
- Declared a special dividend of 80 cps fully franked.
- Acquisition of 75% of e&s for $47.8 million.
FY24 Financial Performance
JB Hi-Fi Limited reported a total sales decrease of 0.4% to $9.59 billion for FY24. Earnings before interest and tax (EBIT) fell by 15.8% to $647.2 million, while net profit after tax (NPAT) declined by 16.4% to $438.8 million. Earnings per share also saw a significant drop of 16.4% to 401.4 cents.
In Australia, JB Hi-Fi achieved a 1.0% increase in sales to $6.61 billion, driven by strong demand for technology and consumer electronics products. However, gross profit decreased by 0.9%, and EBIT fell by 11.0% to $491.2 million. In New Zealand, sales grew by 12.3% to NZD 327.9 million, but EBIT was negative at NZD -2.3 million.
Segment Performance
The Good Guys, another brand under JB Hi-Fi, experienced a 4.8% decline in sales to $2.68 billion. Gross profit for The Good Guys decreased by 5.6% to $621.2 million, and EBIT dropped by 25.8% to $158.1 million. The brand's performance was impacted by increased on-floor discounting and inflationary cost pressures.
Sustainability Initiatives
JB Hi-Fi continues to focus on sustainability, with significant progress in areas such as diversity and inclusion, community investment, and environmental initiatives. The company has improved gender diversity, invested in leadership development, and engaged in ethical sourcing practices. Additionally, JB Hi-Fi has made strides in climate action and product recycling, with solar power generation installed in 30 stores and 100% recyclable packaging used across 77% of its private label range.
Acquisition of e&s
JB Hi-Fi has entered into an agreement to acquire 75% of e&s, a premium home appliance retailer, for $47.8 million. The acquisition is expected to be completed in September 2024. e&s, established in 1962, offers a premium range of kitchen, laundry, and bathroom products through its 10 showrooms in Victoria and online. The acquisition will provide JB Hi-Fi with new customer segments and product categories, including the premium home appliance and bathroom categories.
FY25 Trading Update
For the period from 1 July 2024 to 31 July 2024, JB Hi-Fi Australia reported total sales growth of 5.6%, while JB Hi-Fi New Zealand saw a 12.2% increase in total sales. The Good Guys reported a 2.7% growth in total sales.
The mixed FY24 results reflect the challenges faced by JB Hi-Fi in maintaining profitability amidst inflationary pressures and increased discounting. The acquisition of e&s is a strategic move to diversify its product offerings and customer base, potentially driving future growth. The special dividend and strong cash flow generation highlight the company's commitment to returning value to shareholders.
Investor Reaction:
Analysts may have mixed reactions to the FY24 results, with concerns over declining profitability offset by the strategic acquisition of e&s. The special dividend is likely to be viewed positively by investors, providing immediate returns.
Conclusion:
Investors should closely monitor JB Hi-Fi's integration of e&s and its impact on future performance. The company's focus on sustainability and strategic acquisitions positions it well for long-term growth. Stay informed on JB Hi-Fi's developments and consider the potential opportunities and risks in your investment decisions.