JSE-listed electrical wholesaler ARB said on Thursday that it had positioned itself well to withstand the impact of a tough market as it reported higher earnings for the six months to December.
Headline earnings a share for the first half of the 2013 financial year increased to R18.43, a 17% jump from the R15.69 recorded in the corresponding period the year before, while earnings a share increased to R19.35 in the interim period, from R15.70 in the six months to December 2011.
ARB reported a rise in profit for the period to R58.5-million, up from R46.2-million earned in the first half of the previous financial year.
The group’s earnings-enhancing acquisitions of lighting expert Eurolux and cable distributor Industrial Cable Suppliers (ICS) had contributed to its 39% rise in revenue, from R693-million in the six-month period to December 2011, to R965-million during the period under review.
“These [Eurolux and ICS] acquisitions proved to be earnings-enhancing as their contribution to operating profit substantially exceeded the reduction in interest received,” the company commented in a statement.
ARB’s Electrical Wholesaling unit delivered a “disappointing” performance as a decline in gross margins during the period under review offset the boosted revenue on the back of the ICS acquisition.
The company also attributed the lower-than-expected performance to the costs of implementing new enterprise resource planning software and integrating ICS. The full benefits would likely only be realised during the second half of the financial year.
However, the group’s Lighting segment produced strong revenue growth on the back of market share gains, improved margins and tight cost control.
Meanwhile, the corporate division, which held a portfolio of 17 properties valued at R140-million, the centralised treasury function and ARB IT Solutions, performed in line with expectations.
“The recent corporate activity and more diversified revenue and profit base should positively influence the group’s results for the remainder of the financial year,” ARB said.
The acquisition of both ICS, effective July 2012, and Elektro Vroomen, effective January 2013, enabled ARB to expand its national branch network to 19 branches across South Africa’s nine provinces after adding four new branches in four provinces.
The company also signed an exclusive international distribution agreement for several international electrical products, including the technologically advanced, high-performance transmission conductor ACCC range – a range of bimetallic wire products from Copperweld and low-voltage products from Zhejiang Chint Electrics.
The group decided not to declare an interim dividend.