Furniture and electronics retailer Harvey Norman said it remained committed to the Irish market, despite continuing losses.
The Australian firm's Irish operations narrowed its first-half pretax loss to A$17 million (€11.2 million) from A$19.8 million (€13 million) a year earlier.
In October, the retailer estimated that losses could reach as much as A$50 million (€32 million) in the year to the end of June. This would be the second year of losses from the 14-store unit as the Irish market battles recession.
"It's terrible, we've got a situation where we are losing a lot of money in Ireland and it's not improving," chairman Gerry Harvey said. "I'm not counting on it improving, I'm counting on it staying as bad as it is and hoping and praying it gets bit better."
The group's first-half profit rose 60 per cent on domestic demand for televisions and after year-earlier charges weren't repeated.
Net income rose to A$158.9 million (€104 million) in the six months ended December from A$99.3 million (€65.3 million) a year earlier, the Sydney-based company said in a statement today.
A buoyant Australian housing market, with December home- building approvals up 53 per cent on the year earlier, is driving sales of appliances and furniture for Harvey
Norman and helping it withstand "terrible" losses in Ireland. After not opening any new domestic stores in the half, the company plans to resume expansion, including teaming with Ikea in 2012 for a retail complex in Melbourne's eastern suburbs.
Pretax earnings from the franchising division, which generates three quarters of Harvey Norman's revenue, rose 23 per cent to A$186.8 million (€123 million).
"Despite aggressive competition and discounting, the franchising operations segment result has benefitted from the resurgence of the furniture and bedding categories on the back of the strengthening domestic housing market," the company said.
"Harvey Norman's first-half result shows a recovery in margins, driven by its franchise segment," Craig Woolford, an analyst at Citigroup, said in a report to clients today. "We expect the company's sales growth to outstrip many discretionary retail rivals over the next six months, given Harvey Norman's leverage to the housing sector."
Harvey Norman rose 1.6 per cent to A$3.83 at the close of trading on the Australian Securities Exchange. The stock has fallen 9.2 per cent this year.
Earnings before items and tax rose 47 per cent to A$237.8 million (€156.5 million), beating the company's forecast for a 40 per cent increase.
Harvey Norman has 265 stores in Australia, New Zealand, Slovenia, Ireland and Singapore.
Bloomberg