Profit jump as ARB sales driven up by stay-local explorers

Rugged car gear is proving a huge hit for ARB, which has been buoyed by thrillseekers trading travel for four-wheel driving.

ARB is reaping the benefits of shoppers trading travel for adventures on four wheels, but the pandemic is also hitting the company’s manufacturing and shipping

Rugged car gear is proving a huge hit for ARB, which has been buoyed by thrillseekers trading travel for four-wheel driving.

The parts manufacturer has posted a 97 per cent profit jump to $112.8m, with margins on sales growing far in excess of revenue. This was on the back of a 33.9 per cent increase in sales to $625.8m.

The company is banking on the launch of several new vehicle lines from Toyota and Ford as presenting opportunities for products.

Interest in the Australian company is growing overseas, with international sales up 50 per cent and more growth in sight after ARB fires up its recent UK acquisition.

ARB acquired the Truckman business in the UK in March, creating a beachhead for the company.

But local sales are still the mainstay of business, with 54.9 per cent of business coming from the Australian aftermarket segment.

The company is seeking to grow market share, opening three new stores in the past year.

This takes ARB to 70 stores, 29 of which are company owned.

However, logistic constraints arising from the global shopping boom, coupled with labour shortages, are creating bottlenecks in operations and sales.

“Sales growth in all customer categories was impacted by global supply chain issues, labour shortages, fitment constraints and new vehicle availability resulting in longer lead times and larger than normal customer back orders,” ARB noted.

This problem is further complicated given ARB manufactures most of its products in Thailand, after it broke ground on a new 30,000sq m factory in the country.

In its guidance ARB said it maintained a positive outlook based on strong global sales but noted conditions remained uncertain.

“Ongoing and unpredictable restrictions designed to curb the spread of Covid continue to disrupt supply chains, shipping networks, retail operations and customer fulfilment,” it said. “It is not possible to provide financial or operational guidance in the short term with any level of confidence.”

Clime Investment Management head of investments Adrian Ezquerro said ARB was well placed to enjoy growth in the car market.

“The Ford US strategic collaboration has blockbuster potential for ARB,” he said.

“This result suggests that the company is making further strides towards realising what may become a material contributor to group revenue, all of which is an incremental positive for ARB.”

ARB declared a 39c final dividend fully franked, taking the total to 68c.

Originally published as Profit jump as ARB sales driven up by stay-local explorers