4WD and off-roading auto parts and accessories producer and retailer ARB Corporation Limited (ASX: ARP) reported a 10.9% increase in half-year revenue, yet net profit was only up 1.6%. In afternoon trade, the stock has jumped 5.89% to $12.40.
According to the company, the gain in sales was for the most part due to organic growth, though several small acquisitions ARB made within the last 12 months have contributed as well. ARB manufactures products both domestically and overseas in Thailand. It also operates distribution centres in the U.S. and Europe for worldwide sales.
The Australian after-market for car parts generates the largest proportion of revenue and saw 8.6% sales growth in the first half. Likewise for its export sales growth, but sales to original equipment manufacturers (OEM) saw a very strong 37.1% increase.
The company is looking forward to solid sales growth because it estimates in the second half of financial year 2015 there will be a significant number of new vehicle releases onto the market. Thus, there are good opportunities in both after-market and OEM sales.
Here are the half-year results highlights:
Revenue up 10.9% to $164.7 million
Profit before tax $27.9 million, up 2.9%
Net profit after tax (NPAT) $20.5 million, up 1.6%
Earnings per share 27.85 cents per share, up 0.2% from 27.80 cps
Dividend per share interim dividend of 13 cents per share, same as the previous corresponding period.
Outlook
The company reports it is seeing growth in sales in the first six weeks of the second half. A stronger U.S. dollar could benefit earnings slightly and a much weaker Aussie dollar can help the company with better competitive pricing in overseas markets.
Demand for its products remains stable and the new overseas distribution centres will provide a good platform for growth, according to the company.
If lower interest rates drive vehicle sales in 2015 – 2016, then ARB could see a pick-up in its growth pace. Earnings are forecast to grow an average 7.4% annually for the next two years.
