February 28, 2018 / 12:57 AM / a year ago

UPDATE 1-Australian retailer Harvey Norman's H1 profit falls 19.3 pct, shares plunge

(Adds share movement, analyst quote, details of charges incurred)

By Chris Thomas

Feb 28 (Reuters) - Australia’s biggest electronics retailer Harvey Norman Holdings Ltd said first-half net profit fell 19.3 percent, sending its shares sharply lower, on the back of property revaluations and costs related to its non-core dairy business.

Net profit for the six months to Dec. 31 came in at A$207.7 million ($161.74 million), down from A$257.3 million a year ago.

Revaluations for Australian investment properties fell by about A$53 million to A$22.8 million. Property prices in Australia’s biggest cities have stalled in recent months after years of double-digit price rises.

Harvey Norman also flagged impairment losses of A$20.7 million for the write-down of its investment in its dairy farming business.

Harvey Norman shares fell as much as 14.6 percent to a three-month low in mid-morning trade, their sharpest intraday percentage drop since 1990.

“The main concern is around the headline profit number that came as a shock and the reaction we’re seeing represents a possible downgrading of Harvey Norman against its peers,” said Michael McCarthy, chief market strategist at CMC Markets.

“Dairy farming is seen as a hobby project rather than a core business of Harvey Norman, and the fact that it is dragging on the results is seen as a double negative, potentially.”

Company-operated sales revenue rose 4.7 percent to A$1.02 billion and franchise sales were up 4.8 percent to A$3 billion.

The retailer cut its interim dividend to 12 Australian cents per share from 14 cents per share last year. ($1 = 1.2842 Australian dollars) (Reporting by Chris Thomas and Susan Mathew in Bengaluru; Editing by Stephen Coates)

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