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Growth darling underperforms, retailer delivers bumper dividend

The-Inside-Investor-22-02-213

Dividend boom

JB Hi-Fi (ASX: JBH) has done it again. A bumper result saw shares increase 2.5% at the time of writing, on the back of strong in-store and online growth in the Australian electronics market. The electronics retailer posted a first-half profit inline with market expectations, and pointed towards an optimistic second half. Total sales were up 23.7 per cent to $4.9bn, online sales up 161.7 per cent to $678.8m, earnings up 76.0 per cent to $462.8m, and most importantly net profit after tax (NPAT) up 86.2 per cent to $317.7m.

One of the highlights of the result was the massive increase in interim dividend to 180 cents a share (up from 99 cents), which will be well-received by super-fund yield hungry investors. In addition to the above, management offered an update on January sales and outlook for FY21.

  • Total sales growth for JB HI-FI Australia was 17.3 per cent (January 2020: 6.5%) with comparable sales growth of 18.6 per cent (January 2020: 6.0%);
  • Total sales growth for JB HI-FI New Zealand was 21.7 per cent (January 2020: -1.6%) with comparable sales growth of 21.7 per cent (January 2020: -1.6%); and
  • Total sales growth for The Good Guys was 14.1 per cent (January 2020: 1.4%) with comparable sales growth of 14.1 per cent (January 2020: 1.4%).

The sales momentum gathered during the COVID-19 lockdown has continued into January, with the retailer tipping further growth between 14.1 per cent and 21.7 per cent across its business.

Difficult conditions ahead

Chip design software provider Altium (ASX: ALU) delivered an underwhelming result with shares sold off by almost 5% despite an earlier pre-release. It was a tough year for the electronic design software company that last month released unaudited figures which showed a 3% revenue fall. The half-year accounts show that figure had blown out further to a 4% fall. The EBITDA margin of 33.8 per cent was impacted by a decline in revenue and continued investment in cloud options. Despite this, the company managed a 12 per cent increase in its subscriber base with renewals remaining resilient throughout COVID. The loss comes as a surprise following eight consecutive years of double-digit growth and could be a sign of a more difficult future. The pandemic took the wind out of its US and European operations.

On the positive side, ALU boasts a US$88.3m cash pile, which grew by 9%, and is now is debt-free. The board declared an unfranked interim dividend of 19 cents, down 5%. Management said it had “reaffirmed its long-standing target to reach US$500 million in revenue and 100,000 subscribers by 2025. At the end of 2020, its subscriber base stood at 52,157, a 12 per cent lift over the first-half of FY20. Furthermore, Altium reinforced its updated guidance range for the full-year of “US$190 million to US$195 million in revenue.”

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