Harvey Norman's shares have tanked amid disappointing profits, a reduced dividend and multi-million-dollar write-downs in the value of a dairy investment.

The retailer's net profit dropped almost 20 per cent to $208 million for the half-year to December 31.

Its share price has mirrored that fall, with a 13 per cent slump to $3.99 by 3:05pm (AEDT) and losses as big as 15 per cent — the company's worst one-day fall since April 1990, taking its share price to the lowest level since November last year.

Founder and chairman Gerry Harvey told the ABC he is perplexed by the sell-off.

"They've just knocked $500-600 million, probably $600-plus million off the share price and I don't know why," he said.

"Because our profit is very good, it's the same as last year [excluding one-off write-downs], fractionally better, and it came off a record profit last year."

Mr Harvey remained adamant the company was a good investment.

"The market's just got it completely wrong," he said.

"So if people have got a bit of spare money, my advice would be sell your house, sell your car, sell your boat, buy Harvey Norman shares."

Harvey Norman's earnings only missed consensus analyst forecasts by about 5 per cent, but it also cut its interim dividend from 14 to 12 cents per share, catching investors offguard.

Dairy joint venture turns sour

The fall in profit came despite a near 5 per cent rise in sales revenue, as the retailing giant recorded losses and asset devaluations associated with its Coomboona joint venture.

Investors are concerned about a range of non-core investments that the retailer has made, many of which have resulted in substantial losses.

Coomboona is a dairy farm and stud in north-west Victoria in which Harvey Norman owns a 49.9 per cent interest.

However, in its half-year report, Harvey Norman booked a further $4.57 million loss on its share of Coomboona's trading activities, on top of a $3.26 million loss for the previous corresponding period.

The worsening losses and a dispute with the joint venture partner, Eternal Sound Limited, have prompted Harvey Norman to completely write off the value of its investment in Coomboona, resulting in a $20.67 million hit.

The company's original equity investment of nearly $34 million had already shrunk by about $13 million due to Coomboona's cumulative losses since the joint venture was formed.

However, Mr Harvey described that loss as "insignificant" .

"The big part of our business is all retail, right across Australia and overseas," he said.

"This is a nothing, it doesn't represent anything like 1 per cent, nothing."

Harvey Norman yesterday also demanded repayment of an $18.51 million at-call loan due to the dispute with its joint venture partner, while there is a further $10.25 million loan repayable by the 2020 financial year.

Mr Harvey would not explain why the dairy had underperformed, but said the joint venture partner was short of cash.

"That partnership is now not amicable and the partner that we've got has run out of money and he hasn't got anymore money to put in," Mr Harvey said.

"That's a problem. So now we've got to take control of it and do the best we can with it."

The company has not yet written down the value of these loans but said in its half-year report that they will be "subject to ongoing review and assessment".

Retail real estate values not rising as fast

Another potential concern for investors is a dramatic slowdown in the pace of property price appreciation for Harvey Norman's large holdings of retail real estate.

The value of the company's property went up just under $23 million in the six months to December 31, versus $76 million for the same period last year.

The gap explains all of Harvey Norman's net profit slide.

However, Mr Harvey remained confident his firm's real estate portfolio would continue adding to the company's earnings.

"I would say that if we put our properties onto the market and sold them we'd get $200-300 million more for them than what they're in the books at," he argued.

"So there is certainly no thought that our properties are overvalued — they're undervalued, not overvalued."

Mr Harvey said that, barring another major financial crisis hitting asset values, Harvey Norman's real estate assets would continue to rise in value.

"If things stay as they are, then all that will happen is that every six months we will have another revaluation and properties will keep going up in price," he said.

"Nearly all our opposition don't own property, we're quite unique in the fact that we own a lot of property — all they've got is a rent increase, we've got a valuation of our property going up."

Mr Harvey also pointed to the improved performance of his company's overseas businesses.

"Our overseas businesses are having the best year they've ever had and heading towards a much better year next year," he said.

The half-year report showed a 27 per cent rise in profit from Ireland, a small loss in Northern Ireland, an 83 per cent profit jump in Slovenia, a 6.4 per cent profit rise in Singapore and Malaysia, and a 2.3 per cent profit increase in New Zealand.