ARB warns interim profit down 30pc, but cost pressures moderate

The $2.75bn car accessories maker, warns of a 30 per cent drop in interim profit, but cost pressures on its business have begun to moderate.

ARB warns of a 30 per cent slump in first-half pretax profit.

Car accessories maker ARB has warned of a 30 per cent drop in interim profit as sales slide and soaring inflation piles up on its cost base, but the group flags an improvement in business in the December quarter.

Inflationary pressure in the business – led by freight and steel – had also moderated in the second quarter.

ARB, the $2.75bn specialist for 4WD and car enthusiasts with its large portfolio of car accessories such as towbars, roofracks and car fridges, said preliminary, unaudited management accounts for the first half showed revenue of $340.9m, down 5.1 per cent from the same period last year.

The company said second quarter was slightly ahead of the same period last year, an improvement from the 10 per cent fall in the first quarter reported at the 2022 annual general meeting.

Sales to the Australian aftermarket achieved 2.7 per cent growth during the first half of 2023, while sales to export markets and original equipment manufacturers were consistent with expectations at the 2022 AGM, down 8.8 per cent and 37 per cent, respectively.

This had set the company up for profit before tax within the range of $64m to $64.6m, down 30 per cent from a year earlier.

“The profit result reflects the lower sales and the inflationary impact on the company’s cost base in particular,” ARB said in a trading update to the market on Monday.

“Pleasingly, inflationary pressure on the company’s cost base moderated throughout the second quarter with freight and steel costs retreating towards more historical levels. “Furthermore, recent sales price increases will improve margins and recruitment opportunities appear to be improving despite continuing to be challenging.”

Shares in ARB, once a high-flyer on the market, have been hit over the last 12 months by fears of a slowdown, inflation and falling profits. The stock is down 26 per cent in the last year, however the recent sharemarket rally has seen its shares rose 23 per cent in the last month.

ARB said it maintained a positive short-term outlook based on its continuing strong customer order book, which was in line with order levels throughout 2022.

“ARB is focused on supporting export markets and pursuing various market opportunities while managing input costs and global supply chain pressures.”

ARB expects to release its interim results on February 21.