The ARB Corporation Limited (ASX:ARB) share price rose 1% to $15.76 this morning after the company released its annual results. Revenues rose 7.2% to $382.6 million and net profit after tax (NPAT) rose 3.6% to $49 million. Excluding the benefit from the sale of a company warehouse in the previous year, underlying profits rose 6.3% to $46.2 million.
Earnings per share were 62.1 cents, pricing the company at 25x earnings, and ARB paid dividends of 34 cents per share for a yield of 2.1%. Five new stores were opened throughout the year, taking the number to 61 of which 25 are company owned. Two stores were opened subsequent to the year end, and so did not contribute to results.
ARB continues to grow its export strategy, and reported 14.3% growth in international sales, which now account for 27.6% of total company sales. New contracts with manufacturers are expected to see export growth continue, while the company is also expanding its warehouse footprint in Australia.
Management reported that the company carries no debt and has $26 million in cash. Although this is an insignificant amount of cash given that ARB is priced at $1.2 billion, the company has plenty of room to weather financial shocks and/or take on debt to fund future growth if necessary.
Outlook
Management declined to give formal guidance for 2018, probably a wise decision given what happens to highly priced companies – think Domino's Pizza Enterprises Ltd. (ASX: DMP) – when they miss their forecasts.
Still, ARB noted that it has several promising developments including new contracts, new products, improved distribution, and ongoing healthy demand for its products. With well-aligned management and expansion overseas, the company could be a long-term winner despite what seems like a lofty price tag.
