The ARB Corporation Limited (ASX: ARB) share price is sliding lower on Tuesday morning following the release of the 4×4 parts manufacturer's half year results.
At the time of writing, the ARB share price is down 5% to $40.16.
ARB share price slides despite strong growth
- Sales revenue up 26.5% over the prior corresponding period to $359.2 million
- Profit before tax up 27.6% to $92 million
- Profit after tax up 27.6% to $68.9 million
- Fully franked interim dividend up 34.5% to 39 cents per share
What happened during the first half?
For the six months ended 31 December, ARB reported a 26.5% increase in sales to $359.2 million. This was driven by growth across the business, with Australian Aftermarket sales up 15.6%, Exports up 39.9%, and Original Equipment sales up 50.6%.
In respect to Australian Aftermarket sales, the company notes that its sales growth of 15.6% outpaced the 1.7% growth in sales of new vehicles in ARB's target market. Management believes this reflects the strength of its distribution network, the continuing trend towards local touring, stock availability, and a growing market.
ARB's Export sales grew by 39.9% and now contribute 38.4% of the total sales. This is up from 34.7% in the prior corresponding period. ARB's Export sales were boosted by the addition of Auto Styling Truckman in the UK, which was acquired in March 2021 and therefore was not part of the prior corresponding period's figures. Outside this, the segment benefited from sales growth in the USA, the UK, and the Czech Republic.
Finally, Original Equipment sales increased 50.6% over the prior corresponding period thanks to OEMs stocking up in preparation for new vehicle model launches and the addition of new business. However, this strong form is not expected to continue, with sales to OEMs expected to soften during the second half.
Outlook
No guidance has been given for the full year due to COVID uncertainty, but management has provided the market with an idea of what it expects.
It explained: "The Company maintains a positive outlook based on a strong customer order book, improved inventory levels and new products that are yet to be released to market. However, the flow on impacts of COVID19, including disruptions to supply chains, shipping networks, retail operations and customer fulfilment, requires ARB to remain focused on managing customer expectations and supply chain pressures."
"Notwithstanding the uncertainty in the current global economic and political environment, ARB continues to develop and pursue its exciting long term growth opportunities, including further growth in Australia and in export markets, new products, improved distribution and increased manufacturing capacity. The Board believes ARB is well positioned to achieve on-going success with strong brands around the world, loyal customers, very capable senior management and staff, a strong balance sheet and growth strategies in place," it concludes.
