The ARB Corporation Ltd (ASX: ARB) share price is racing higher this afternoon.
Shares in the vehicle accessories business are up 7% to $43.05 in afternoon trade after the company released its FY24 full-year results. For comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.14% higher after forfeiting much of its gains throughout today's session.
ARB share price rebounds on solid results
The official cash rate has sat at 4.35% for ten months, but that hasn't stopped ARB from driving stronger results in FY24. Here are the key numbers from the motor vehicle accessory seller:
- Sales revenue up 3.3% from FY23 to $693.2 million
- Net profit before tax up 15.8% to $141.4 million
- Net profit after tax (NPAT) up 16.1% to $102.7 million
- Final fully franked dividend of 35 cents per share, up 16.7%
- Net cash balance of $56.5 million, increasing by $11.6 million
ARB's earnings benefitted from a reduction in 'materials and consumables used', with improved product margins. However, employee and occupancy expenses rose 6.4% and 15.9% compared to the previous financial year.
What else happened in FY24?
The 12-month period witnessed a major uptick in new vehicle sales versus FY23. Fortunately for ARB, key target vehicles such as the Ford Ranger, Toyota Hilux, and Isuzu D-Max were the top three highest-selling vehicles in Australia during FY24. Furthermore, the sales growth for each model was 35%, 15%, and 32%, respectively.
ARB's largest segment—the Australian aftermarket—saw sales growth of 5.4% for the full year. In contrast, the company's exports segment recorded a 6.5% reduction in sales in FY23, attributed to 'challenging' conditions in the United States.
Finally, ARB's original equipment arm generated a considerable 40.5% sales growth. However, the large increase is less impactful because original equipment made up only 8.6% of total sales during the period.
Group sales revenue only marginally grew (0.2%) in the first half. Meanwhile, the second half delivered a 6.4% increase, indicating greater strength in the back half of FY24. This aligns with the resurgence in motor vehicle spending in June, as reported in Commbank Research's June household spending insights.
What's next for ARB?
In a positive sign for the future, ARB's aftermarket order book 'remains strong' while its export order book is 'trending positively'. The latter is improving as the company moves past supply challenges with the Nitrocharger product.
Furthermore, the company notes a positive start to trading in the first quarter of FY2025. Based on current agreements, management expects a similarly positive trend to occur across OEM sales. Still, ARB says it will consider strategic acquisition opportunities to supplement its organic growth.
ARB made two small acquisitions in the first half of FY24: ORW USA and Nacho LED.
The ARB share price has outperformed the benchmark index over the past year, rallying 28%, as displayed in the chart above.
Based on the company's FY24 NPAT, shares in ARB now trade on a price-to-earnings (P/E) ratio of 34.3 times FY24 earnings.
