Kresta profit up 45% to $3.5m

Leading national window coverings company Kresta Holdings Limited is on track to exceed last year's full year financial result after announcing a 45 per cent increase in net profit after tax for the half year.

In the period ending 31 December 2007, the company achieved a NPAT of $3.5 million, compared to $2.4 million for the corresponding period last year.

The company also achieved a 36 per cent increase in Earnings before Interest and Tax (EBIT), from $3.9 million to $5.3 million.

The total Cost of Doing Business (CODB), a key indicator within the retail sector, was 87 per cent, an improvement of 1,000 basis points on the 31 December 2006 CODB percentage (97 per cent), refelcting the company's focus on generating operational efficiencies.

As a result of the first half figures the directors have declared a fully franked interim dividend of 1.5 cents per share, payable in July 2008. This is a 50 per cent increase in the interim dividend paid last year.

Other highlights include the independent valuation of land and buildings owned by the group exceeding book value by $8.7 million, the building of a 4,000 square metre warehouse on surplus land which has created substantial rental savings, and continued store rollouts for Curtain Wonderland, Kresta and Vista.

Kresta managing director Tass Zorbas said "We have worked very hard on getting the fundamentals right to ensure that Kresta continues to grow and that this growth can be sustained".

"The strong growth in the past six months has been achieved through higher margins, management restructuring and operational efficiencies", Mr Zorbas said.

Having opened five new stores and relocated two others in the past six months, with plans to open up a further seven in the coming six months, the company believes it is on track to achieve further positive earnings growth in the coming 12-18 months.

"It takes some time for new stores and relocated stores to start making an impact on the bottom line, so we expect stores opened or relocated in the past six months to play an important part in the financial performance of the business in the next 12-18 months."

With the favourable economics for each new store, the company expects to continue to grow its earnings through store rollouts and plans to open a further 50 stores in the next 3 years.

Kresta said Curtain Wonderland was on track to provide further benefits to the group from currency savings associated with the strong Australian dollar, economies of scale, and incremental earnings associated with the rollout of new stores.

"The directors believe the company has now set a solid foundation for growth and is well positioned to continue to grow the company's earnings through these initiatives. However, like other retailers we are exposed to the challenges of increasing interest rates and other pressures on household expenditures." Mr Zorbas said.