Michael Hill International posted a 46 per cent gain in first half profit after cutting costs to offset declining sales in its largest market of Australia, and boosting earnings in New Zealand and Canada.

The Brisbane-based jewellery chain increased profit to $A23.7 million ($NZ24.84 million) in the six months ended December 31, from $A16.2 million in the year earlier period.

Revenue rose 4.6 per cent to $A283.2 million.

Michael Hill’s Australian unit, which accounts for about 60 per cent of revenue, posted a 1.9 per cent drop in first half sales to $A168.5 million, even as the company opened two new stores, taking its total in the country to 166.

Australia’s economic growth has slowed as prices for the country’s commodity exports, such as iron ore, dropped.

“The Australian market has continued to be challenging due to lower consumer confidence, especially in regions where the resource sector is prevalent,” the company said.

“Costs have been a focus over the period and this has assisted with delivering an improved result.”

Michael Hill’s Australian unit increased its operating surplus by 8.6 per cent to $A31.5 million from the year earlier period.

In New Zealand, the operating surplus rose 13 per cent to $14 million as revenue advanced 3.8 per cent to $63.2 million. The number of stores remained unchanged at 52.

Michael Hill will pay a 2.5 New Zealand cents a share dividend on April 2, unchanged from the year earlier period.

The company says it plans to undertake “significant investment” in the second half of its financial year as it repositions its brand.

BusinessDesk