The ARB Corp Ltd (ASX: ARB) share price is taking a beating today, down 11.9%.
Shares in the S&P/ASX 200 Index (ASX: XJO) 4×4 accessories manufacturer closed yesterday trading for $33.54. At time of writing on Tuesday, shares are swapping hands for $29.56.
For some context the ASX 200 is down 0.2% at this same time.
This comes following the release of ARB's full-year results for the financial year ending 30 June (FY23).
Here are the highlights.
ARB share price tumbles on eroding profits
- Sales of $671 million, down 3.4% from FY22
- Net profit after tax (NPAT) of $89 million, down 27.5% year on year
- Earnings per share (EPS) declined 27.8% from the prior year to $1.079 per share
- Cash reserves of $44.9 million and no debt as at 30 June
- Interim fully franked dividend of 32.0 cents per share, down from 39.0 cents per share in FY22
What else happened during the year?
The drop in annual sales, likely pressuring the ARB share price today, was reported to be due to ongoing fitting personnel shortages and supply chain challenges.
On a brighter note, the company said that the 3.4% decline for FY23 marked an improvement on the 5.1% sales decline in the first half of the year and the 10% decline in the first quarter.
As for the slump in profits, management said the company faced a difficult trading environment over the year "stemming from the sales levels, inflationary pressures, the timing of sales price increases, exchange rates and overhead recoveries".
ARB noted that the sales price increases it initiated have now cycled through its high customer order book, reporting that sales margins have returned to historical levels.
The full-year dividend comes out to 62 cents per share, down from 71 cents per share in FY22. At the current ARB share price that works out to a fully franked yield (partly trailing, partly yet to be paid) of 2.1%.
If you want to grab the final dividend, you'll need to own shares by market close on 5 October. You can then expect that passive income to hit your bank account on 20 October.
What's next?
Looking at what could impact the ARB share price in the year ahead, chairman Robert Fraser said:
The outlook remains positive with ongoing healthy demand for ARB's products, improving new vehicle supply around the world, stronger gross profits and new products recently and soon to be released to market. The board anticipates sales and profits to grow in the 2024 financial year.
Fraser noted that product development is "a key element to maintaining ARB's long-term competitive advantage" with some long-term product development projects planned to be released in FY24.
Fraser added:
The board is pursuing a number of exciting long-term opportunities focusing on export markets, new partners, the release of new products, further expansion of ARB's store network and improved distribution in Australia and internationally.
ARB share price snapshot
Despite today's big retrace, the ARB share price remains up 15% in 2023. Shares are down 6% over 12 months.
