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Aug 27, 2008

Electrical wholesaler ARB targets State-owned enterprises for growth

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Africa|CoAL|Eskom|Housing|Mining|Africa|Product|Products|Solutions|Infrastructure|Power
Africa|CoAL|Eskom|Housing|Mining|Africa|Products|Solutions|Infrastructure|Power
africa-company|coal|eskom|housing|mining|africa|product|products|solutions|infrastructure|power
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Increased government spend and Eskom infrastructure expenditure was expected to continue driving sales growth for JSE-listed electrical wholesaler ARB in the future.

The wholesaler, with CEO Craig Robertson at the helm, reported that despite the power crisis in South Africa, the electrification of rural areas would continue unabated, specifically the electrification of schools, clinics and low-cost housing.

Speaking at the group’s results presentation in Johannesburg, Robertson said that parastatals, some of which were already customers of ARB, would be a target focus for the future, as spending from these would become vast.

“We are positioned to take advantage of that spend,” he commented.

The company expected to benefit particularly from increased spend by Eskom as part of their rural reticulation programme of getting electricity to all by 2014.

Robertson explained that the electricity connections in KwaZulu-Natal and the Eastern Cape would double over the next 18 months to three years.

The electrification programme was also expected to start picking up pace in Limpopo province.

Further, government was investing R568-billion on infrastructure over a three-year period, which ARB said would benefit the company, as electricity was required for infrastructure developments.

Meanwhile, after its year-end in June, ARB had established ARB Global, which focused on exporting the group’s offerings into Africa.

“The whole of Africa has to be electrified, and those products will come from the strongest base in Africa, which is South Africa,” said Robertson.

He added that only a small capital investment was required to take advantage of the growth prospects of exports to Africa. He expected ARB Global to see a fivefold growth in revenue in the near term.

ARB was also expanding into Africa at a time when infrastructure developments were increasing on the continent.

In May, the wholesaler opened a branch in Nelspruit, in Mpumalanga province, which the company believed would allow it to enter the Mozambique market, which was part of the Maputo Development Corridor.

In addition, Nelspruit was also situated in the coal-mining Mpumalanga province, which would benefit the wholesaler’s new ARB Mining division.

This division was established after the company’s year-end and was a new focus for ARB.

“There is a global trend that mining houses are now adopting. They are using fewer and fewer suppliers,” commented Robertson.

He added that ARB could offer turnkey solutions to the mining industry with its product offering and the stock levels it kept. The division would especially take advantage of the opportunities in Southern Africa.

Meanwhile, the wholesaler would continue to look at acquisition opportunities, but would consider these carefully.

FINANCIAL RESULTS

ARB, which listed on the JSE in November last year, on Wednesday reported a 23,7% increase in headline earnings to R104,1-million for the year ended June 30, 2008, compared with R84,2-million the year before.

Headline earnings a share had increased by 11,8% to 47,1c a share for the year ended June 2008, compared with 42,1c a share in 2007.

Net profit for the year rose by 22,6% to R135,1-million, compared with R110,2-million the year before, while revenue jumped by 28,3% to R1,34-billion for 2008.


Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
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