ARB putting up a decent result in a challenging environment. Decent sales growth with a bit of a hit to NPAT.
Challenges include, the Aussie dollar trading at an all time low against the Thai Baht (where a lot of the products are made), Tariffs against imports to the US, difficulty attracting and retaining skilled labor in Aus and around a 15-20% reduction in new car sales across the key models to ARB.
On the positive side, export markets have all seen growth, a lot of the Aussie stores are seeing refits and investments as well as the HQ, investments into an online portal and digital marketing. The big one is the US strategy seems to be paying off, having reached profitability milestones early despite a fairly challenging economic and political environment.
I'm encouraged by the fact they're still seeing sales growth in a challenging environment, and they're taking the time and spending the money to shore up the foundations. If they can do that in a challenging environment I'm keen to see what they can do if/when they can get on a roll with new car sales and a more favourable consumer spending environment in Australia (if there is one thing that aussies love more than seeing equity grow in their property, it's stripping that equity out to buy a caravan and do up the 4x4).
As always time will tell but I feel they're positioning themselves well for the future, just need to wait for it to arrive now.
-Held irl and on SM
Monday 9th June 2025: I believe ARB Corporation has been sold off MOSTLY because of tariff concerns, because they manufacture their own products such as bull bars (a.k.a. "roo bars" here in Oz), canopies, roll bars, cargo barriers, spotlights, etc. in Melbourne, Australia and in Thailand; they also source product from China, especially for the US market which is their main growth driver currently, growth that has been accelerated by their acquisitions in late 2024 of the US-based Off-Road Warehouse (ORW) and 4 Wheel Parts (4WP) chains of stores. ARB are expanding those store networks into new states in the US as well as opening new stores in states in which they already operate.
Source: Page 16 of ARB's H1 of FY2025 Results Presentation: https://www.arb.com.au/wp-content/uploads/2025/02/FY2025-HALF-YEAR-INVESTOR-PRESENTATION.pdf
As you can see there (above), they have only just scratched the surface in terms of that expansion; it's still in its early stages.
If you only looked at ARB in terms of their Australian store network, you could view them as a mature company, but Australia, while being their home ground, is not where their main growth is coming from these days.
Yet, despite being a quality company that is profitable and growing, with good management who have skin in the game (6.04% of ARB's SOI are owned by Andrew and Roger Brown, the brothers who run the company, a share that is currently worth $158 million), ARB has been sold down significantly in 2025:
The selling actually started back in early October, so they've been in a strong downtrending channel for 8 months now. From $48 to $27 (-$21 or -44%) and they're still towards the bottom of that range - at around $31 to $32/share.
While it started 8 months ago, the ARB sell-down did however accelerate when Trump started throwing large tariff numbers around. To give you an idea of how brokers are viewing those tariff risks to ARB, here are some excerpts from FNArena.com today:
First, an overview of the calls (Recommendations) and Target Prices of the brokers that FNArena follow closely:
And here are the most recent updates from those brokers as summarised by FNArena - I have highlighted tarrif commentary in orange:
The following updates were back in February after ARB's H1 results were released and FNArena suggest that Macquarie, Morgans, and Morgan Stanley have not sent out any client notes or updates on ARB since then:
And below are the calls and target prices from the two "Other" brokers that FNArena cover less closely:
They have omitted Goldman Sachs who are listed below as having a "Neutral" call on ARB and a $38 Target Price on Feb 20th.
Wilsons (whose Feb update summary is highlighted in the green rectangle above) are the most bullish on ARB, however there are no updates listed from Wilsons since Feb 19th.
For those who may be interested, here's Commsec's breakdown of the "Subs" for ARB as at 25th July 2024:
Since then, we have seen AFIC (AFI, one of Australia's oldest LICs) enter the register on 14th March 2025 with 5.03% of ARB and we have seen some buying and selling from 4 of those other names above. Below are the latest moves from them:
- Bennelong sold down from 12.57% to 11.50% on 22nd October;
- MUFJ and First Sentier (First Sentier is regarded as a controlled subsidiary of MUFJ so it's the same position) bought and sold heaps (they have a history of loaning shares to shorters) and ended up with 6.08% of ARB on 23rd May 2025 (being their latest update); and
- State Street (one of the world's largest ETF providers) moved from 5.02% up to 6.07% on Feb 2nd.
Also, to be clear, Rogand Pty Ltd is ROGer and ANDrew Brown's private investment vehicle in which they hold their ARB shares. Both are directors of ARB and Andrew is ARB's MD. Their brother Anthony Ronald "Tony" Brown founded the company back in 1975 with ARB being his initials, however it is now run by Andrew and Roger Brown (So the ARB acronym could now stand for them instead of their brother Tony).
Below are some of the more important (IMO) metrics that I follow regarding ARB:
Source: https://fnarena.com/index.php/analysis-data/consensus-forecasts/stock-analysis/?code=ARB
They're not the best company on the ASX, but they're easily in my top 20 in terms of quality management and quality products, and they do have a moat, which is a superb industry reputation and loyal repeat customers.
Additionally they have another moat (competitive advantage) through their early involvement with OEMs (Original Equipment Manufacturers, in this case Utility Vehicles ["Ute"] and 4WD manufacturers) where ARB often design bull bars and other accessories for these vehicles either during the vehicle design stage or shortly after the vehicle design has been finalised, with the full cooperation of the OEMs, so not only is their gear recommended by the OEMs, it is often purchased by the OEMs to be fitted on certain models as either included or optional accessories when those vehicles are first sold.
Anyway, this straw isn't supposed to be a bull case for ARB, as I've done that already. This one is just to suggest that while the quality and management premiums look to have either partially or fully come out of the share price of ARB now, there is also the murky outlook around tariffs weighing on sentiment around this company.
And if you think that the US and China trade war is just beginning and is going to get a LOT worse and likely drag the whole world in - in terms of being a negative on global growth - then that probably makes sense.
If, on the other hand, you think that Trump Always Chickens Out (TACO) and the tariffs are either going to eventually settle at around 10% across the board, perhaps higher for China, or get scrapped altogether, then these levels may present a good entry point for companies like ARB who have clearly been caught up in the negative sentiment associated with the tariff impacts.
As has been commented on here many times, quality companies will likely trade at a decent premium most of the time, so when they do get sold down substantially on what looks like a temporary issue rather than a structural one, it can be a great time to build a position - or increase one.
Disclosure: I hold ARB shares, both here and in my SMSF.
Forecast Ex Div Date: 06/10/2023 (45 days away)
Not a good Report, Could consider.
Gross Profit Margin: i cannot find this.
ARB is well managed by the Browns
No Debt so guessing a short blip in the charts.
Return (inc div) 1yr: -7.32% 3yr: 8.97% pa 5yr: 8.97% pa
06-Feb-2023: Market-Update.PDF
The Board of ARB Corporation Limited (“ARB” or the “Company”) provides the following update to the market for the half year ended 31 December 2022 (“1H FY2023”).
Based on preliminary, unaudited management accounts for 1H FY2023, the Company achieved:
- Sales revenue of $340.9 million, down 5.1% compared with the previous corresponding period. Pleasingly, the second quarter of 1H FY2023 (“2Q FY2023”) was slightly ahead of the same period last year, an improvement from the 10.0% decline in the first quarter reported at the 2022 AGM. Sales to the Australian Aftermarket achieved 2.7% growth during 1H FY2023, whilst sales to export markets and original equipment manufacturers were consistent with expectations at the 2022 AGM, down 8.8% and 36.9% respectively.
- Profit before tax within the range of $64.0 million to $64.6 million, a decline of 29.7% compared with the previous corresponding period. The profit result reflects the lower sales and the inflationary impact on the Company’s cost base in particular. Pleasingly, inflationary pressure on the Company’s cost base moderated throughout 2Q FY2023 with freight and steel costs retreating towards more historical levels. Furthermore, recent sales price increases will improve margins and recruitment opportunities appear to be improving despite continuing to be challenging.
The Company maintains a positive short-term outlook based on its continuing strong customer order book, which is in line with order levels throughout 2022. ARB is focused on supporting export markets and pursuing various market opportunities whilst managing input costs and global supply chain pressures.
The Board believes ARB remains well positioned to achieve long term success through:
- New product development with a number of new and innovative products to be released in 2H FY2023;
- Expansion of the Australian Aftermarket through new and upgraded retail stores and stockists;
- Strategic partnerships with key Original Equipment customers in Australia and internationally;
- Increased distribution and manufacturing capacity to accommodate future growth; and
- A well-balanced management team with a blend of long-term ARB and experienced external executives.
ARB expects to release its results for 1H FY2023 and further commentary on Tuesday, 21 February 2023. The Company will host a webcast of the 1H FY2023 results at 10.00am on the same day, details for which will be provided via an ASX announcement one week prior.
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Slightly down on the prior period, with OEM sales well down (-36.9%) which was partially offset by increased sales to the Australian aftermarket (retail sales through ARB stores throughout Australia).
PBT around $64m, a -29.7% decline on the pcp. Lower sales and higher costs were to blame, but costs ("inflationary pressures") moderated through the December quarter. They mention that both freight and steel costs have declined towards more historic (normal) levels. They also call out that they've managed to push through sales price increases recently and recruiting, while still challenging, is becoming easier (improved recruitment opportunities). Their NPD pipeline remains strong and they plan to roll out further ARB retail stores and upgrade others.
There's more detail in there, but those are the main takeaways from my POV, as an ARB shareholder. The market appeared to like this update this morning, with the share price up to as high as $34.02 (they closed yesterday at $33.40), but by the end of the day, they were slightly down for the day (-8 cents at $33.32, or -0.24%), pretty much in line with the ASX200 Index, which was down -0.25%, so they performed in line with the market today really. The All Ords closed down -0.33% as smaller companies seemed to perform a little bit worse than the top 200 companies did.
I see no real issues with this update. It means that there will be no surprises on the 21st when they announce their official audited results. I regard ARB as having one of the best management teams of ANY ASX-listed company. They would certainly be in my top 5, probably in my top 3. I rate their management very highly, based entirely on their track record over the years, including their record of superb capital management - where they either reinvest profits back into the business at very good rates of return or else they return excess funds to their shareholders. It helps that Andrew Brown (their MD) and Roger Brown (their Chairman) together hold just over 6% of the company, worth $164.5 million (based on today's closing share price), so they think like business owners, not just business managers. Plenty of skin in the game.
ARB 4x4 Accessories - Your partner in adventure
Disclosure: I hold ARB shares both here and in a number of my real life portfolios, including my SMSF.
28-Oct-2022: ARB Corporation 2022 AGM Presentation
See Also: ARB Corporation 2022 Annual Report
Like many companies at the moment, ARB have been sold down on their AGM Presentation today, finishing the day down $1 (or -3.57%) at $26.98. That's a fair way below their $50+/share highs during the second half of last year. Their share price has almost halved since then.
As usual, ARB's management have given conservative guidance, with continued growth forecast, albeit more weighted to the second half. I'm a holder of ARB shares, both IRL and here on SM, and they're one of the highest quality companies on the ASX in my opinion, with some of the best management also. The company's share price does tend to trend well, as that graph shows, so I'm planning to top up my positions once they eventually stop falling and then establish another uptrend.
ARB Corporation
Over the last 10 years ARB has continued to exhibit all the hallmarks of a great quality business.
NPAT margin has never been less than 12% and reached 18% last year.
Return on Equity has ranged from the mid-teens to just over 25% - anything over 15% is very good, anything over 20% is pretty special.
Earnings have been very well reflected in the operating cash flow over the last decade and, although earnings flattened out in the middle part of the decade there were sound investment reasons for this. The 10 year CAGR in EPS is 11.4%
The PE ratio and its comparison to the market PE clearly shows that ARB has always been regarded as a quality company and that you can rarely buy these companies cheaply. The current PE is just over 48 times which is quite lofty but is what happens when increase profits by almost 100% (FY21 vs FY20) and are bullish on outlook.
The company’s market capitalization has increased by 20% compound over the last ten years – on a per share basis, accounting for the issue of just 9 million shares over period - the increase is 18.9% and is well north of 20% if you count the dividends paid.
The company exhibits strong financial health, a healthy current ratio and a quick ratio well north of 1:1 as well as having net cash throughout the period.
ARB is opening a new production facility in Thailand in December. This is a 33,250 sq metre facility on 60,000 sq metres of land. A further facility has been acquired in the same area providing a further 12,200 sq metres of production. These add to the company’s international production facilities in USA, UK and NZ.
The company continues to research and develop new products to add to its range and to add new customers, including Ford in the USA for whom ARB will supply branded parts for its Bronco range. This has become a truly global business (export sales grew by 50% in the last year and now represent 36.7% of total sales). ARB is still managed by the Brown family who are major shareholders.
The company’s outlook statement at its recent AGM was encouraging.
Pandemic induced restrictions during the first quarter of FY2022 impacted ARB in a number of its markets, including significant lockdowns in Victoria and New South Wales. Despite these restrictions, trading performance remained strong during the quarter with pleasing sales and profit growth.
Management continues to meet the challenges and uncertainties in the current trading environment, including foreshadowed vehicle supply interruptions, COVID-19 related impacts and the cost and reliability of freight services.
ARB’s order book remains strong, both domestically and internationally, and the Company is continuing with its product development work, store development program in Australia and the expansion of its manufacturing capability.
The Board is pleased to report that, in the absence of unforeseen circumstances, sales and profit growth is expected to continue for the first half.
The Board believes that the Company is well positioned to achieve long term success with strong brands around the world, increasing manufacturing and distribution capacity, capable senior management to meet any challenges and a strong balance sheet to take advantage of opportunities as they arise.
Disc.: One of my largest holdings (owned since 2009)
14-July-2021: ARB released this Market Update at 5:13pm AEST today, being after the market had closed. I'm thinking they might pop a little tomorrow.
It went a little something like this...
The Board of ARB Corporation Limited (“ARB”) is pleased to provide an update to the market for the financial year ended 30 June 2021.
The Company advises that it achieved unaudited sales revenue of $623 million for the financial year ended 30 June 2021 which represents growth of 33.9% compared with the prior year. Based on preliminary, unaudited management accounts, the Company’s profit before tax for the financial year is within the range of $145 million to $150 million.
ARB expects to release its results for the financial year ended 30 June 2021 on Tuesday, 17 August 2021.
The Company maintains a positive short-term outlook based on its consistently strong customer order book. ARB is focused on managing input costs and global supply chain pressures whilst pursuing various market opportunities. The current pandemic and economic conditions remain very uncertain and it is not possible to provide financial or operational guidance beyond the short term.
The Board expresses its appreciation to customers and suppliers and recognises the commitment and efforts of ARB’s staff around the world.
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[I hold ARB shares in 2 of my real life portfolios, and they're also in my Strawman.com virtual portfolio.]
Alexa rank was down during lockdown, I think. It's now up to a marginally higher high of the year. Not bad currently.
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ARB is the "bloke's stock". They make and sell 4 wheel drive (4WD) vehicle accessories, including bull bars, roof and luggage racks, cargo barriers, canopies, spotlights, winches, camping gear for 4WDs, fridges/freezers; it's a long list.
They always look expensive, but they keep on growing, increasing their dividends every year, paying an additional special dividend about once every 5 years, finding new ways to grow, and avoiding debt like the plague - always maintaining a net cash position. Even in a recession people will still spend money on their vehicles, and that goes double for 4WD enthusiasts. ARB's chain of retail shops across Australia are all staffed by 4WD enthusiasts, which is why 4WD owners like to shop there.
ARB sells its products to distributors around the globe. The 4WD market is growing in many parts of the world and continues to provide strong growth potential for ARB. Exports remain a key focus, attracting further investment in both infrastructure and marketing. Export sales grew by a strong 14.7% in FY18 and now represent 28.0% of the Group’s sales.
ARB has distribution centres in Australia, the USA, the Czech Republic, Thailand and in the United Arab Emirates.
Despite the demise of the car manufacturing industry here in Australia, sales to Original Equipment Manufacturers (OEMs) by ARB grew by 2.8% for the year and now represent 6.9% of the Group’s sales. Some OEM projects were delayed in H2FY18 due to programme complications but those projects are planned to commence shortly. Accordingly, the Company is confident of better OEM sales growth in the 2018/19 year.
ARB regards product development as a key element in maintaining the Company’s long term competitive advantage. Research and development expenditure is continuing to increase in line with Company growth. During the year, more new vehicle releases have occurred both in Australia and overseas and new products for these vehicles are being released into the Company’s factories on a weekly basis.
ARB maintained a steady stream of new product releases throughout the year, most notably including the releases of LINX, ARB Tailgate Assist, the ARB hydraulic JACK and Summit Raw Rear Bars for utilities.
Work is also continuing on a number of long term development projects that will provide growth opportunities for the Company in the future. To get a better idea of ARB’s new product releases, the Company’s website at www.arb.com.au is a great source of information.
