KEY POINTS:
Hellaby Holdings has slashed its dividend after poor first half sales saw profits take a tumble.
Net profit for the six months ending December 31 - including a one-off cost of $2.6 million relating to the International Financial Reporting Standards - was $2.8 million, down from $9.3 million the previous year.
Shares in Hellaby, which said in January that interim earnings could be down by half, closed down 1c yesterday at $4.02.
The underlying tax-paid profit was down 52 per cent at $4.49 million.
Managing director David Houldsworth said the company was taking a cautious approach with the interim dividend.
"We just prefer to let the year run its course and then we can pay out a final dividend which will more accurately reflect what we know has happened, rather than what we believe is going to happen," Houldsworth said.
The company had been an early adopter of the reporting standards and had not had a requirement for all businesses in the group to adopt hedge accounting, he said.
"So the impact of the movement in the New Zealand dollar on forward exchange contracts and financial instruments has been quite significant in this first half of the year ... but we've now moved to adopt hedge accounting throughout the group so it won't occur in this way again," Houldsworth said.
The slide in half year profit followed disappointing sales during November and December at Hellaby's Hannahs and Number 1 Shoe Warehouse, lower contributions from industrial businesses, and the loss of profit from Rodd & Gunn, which was sold year. Both sales and profitability were expected to recover in the second half and back to school sales had been ahead of last year.
However, a stronger finish to the year would still not be enough to recover the profits already dropped, he said.
"It was just such as disappointing first half that we couldn't do that and certainly most of our businesses are giving much more positive indications on the second half, which gives us confidence, I guess, to feel that our previous indication [for the year] is correct."
Underlying tax paid profit for the full year, before the reporting standards adjustment, was expected to be down by about 20 per cent.
