Investment company ARB Holdings has posted a profit of R77.97-million for the six months to December 31, marginally higher than the profit of R77.68-million posted for the six months to December 31, 2015.
Revenue was up 3.1% year-on-year to R1.27-billion, as a result of revenue growth in the electrical division being marginally higher in an extremely challenging market, owing to the expansion of its Connect branches.
However, ARB pointed out that the division's revenue was still adversely affected by the delay in the implementation of municipal projects.
“With limited trading opportunities, the gross margin remained under pressure, predominantly in the high-value cable-related products,” the company said, noting that the division’s operating profit had decreased by 2.1% to R62.8-million, with an operating margin of 6.2%.
The lighting division, meanwhile, continued to expand its product range to existing customers, with revenue up 5.7% year-on-year to R270.6-million. While the volatile exchange rate again put pressure on margins, the management of overheads resulted in operating profit increasing by 8.9% to R32.5-million and operating margin improving to 12%.
Changes in the product mix and the emphasis on ensuring trading discipline were maintained, resulted in the gross profit margin increasing narrowly to 22.8%. The group's operating profit decreased slightly to R104.5-million, from R10.48-million in the comparative period, at an operating margin of 8.2% of revenue.
The group continued to be cash generative, remained ungeared and at the end of the half-year had net cash on hand of R174.8-million, after the payment of dividends during the reporting period, of R93.4-million.
Tight cash management resulted in an increase of 30% in net interest received to R6.6-million.
“We foresee little or no change in the general trading environment given the low economic growth forecast for South Africa, but we remain confident that the group has the resources to continue to build customer loyalty, which will open new opportunities,” ARB stated.
As such, the group will, in the medium term, invest in organic growth opportunities for its electrical division, through the establishment of new distribution outlets.
These also have opportunities to supply product from ARB’s overhead lines department to Eskom, which is aiming to increase its electrification target to over 200 000 households by the end of March 2018.