Pent-up demand for off-road adventures drives ARB sales rise

Car equipment manufacturer ARB is racing to fill orders from Australians fleeing home isolation for some off-road adventure.

ARB highlighted the pent-up demand ripping its products from the shelves in parts of Australia as well as in its key export markets.

Australians fleeing home isolation for off-road adventures and long trips in their four-wheel drives have generated a hefty 17.7 per cent increase in quarterly sales for car equipment manufacturer ARB, with the company racing to fill orders, although the extended lockdown in Melbourne has moderated growth.

Shares in ARB rose 2.1 per cent, or 63c, on Wednesday to close at a record high of $30.04 as the manufacturer highlighted the pent-up demand ripping its products from the shelves in parts of Australia as well as in its key export markets. Its shares have almost tripled since the lows of March when its stock sank to below $12 in the global sharemarket rout in the wake of the emerging pandemic.

In a trading update on Wednesday ARB, whose market capitalisation sits at $2.35bn, said it had achieved unaudited sales revenue growth of 17.7 per cent for the first quarter to September 30 compared with the previous corresponding period.

The company said based on preliminary, unaudited management accounts, ARB’s profit before tax for the quarter was $29.7m, excluding non-recurring government benefits of $9.7m related to the quarter. In the 2020 financial year ARB posted a full-year profit of $57.295m.

“Excellent growth was achieved in export markets, while domestic Australian sales growth was moderate and, as expected, original equipment manufacturer sales decreased compared with the same period last year,’’ the company said in its ASX statement.

It said the extended lockdown in Melbourne had an adverse impact on local sales during the quarter but orders were building.

“The level of outstanding orders remains high and work is being done to overcome logistical difficulties and to increase production to reduce the order bank and better service customers,” it said.

“The board believes a substantial proportion of the recent growth can be attributed to satisfying pent-up demand created during the lockdown period. In addition, an increased trend towards local touring in several countries has been helpful and government support has provided spending stimulus to people and businesses. In the absence of a significant change in the economic environment, export sales are expected to remain strong and the OEM order book is growing.”