Photo by: Duane Daws
Electrical and lighting product distributor ARB Holdings on Wednesday reported increases of 27% in its operating profit and headline earnings a share for the year ended June 30, to R203-million and 50.28c respectively.
The increase in operating profit resulted in an improvement in the group’s operating margin from 8.3% to 9.2%.
During the period under review, ARB also increased its revenue by 14% to R2.2-billion, making this the first time the group achieved revenue of more than R2-billion.
ARB stated that the revenue growth was predominantly organic, reflecting strong market share gains by its electrical and lighting divisions.
Further, improved trading disciplines saw ARB’s gross margin increase from 21.9% to 23.8%.
Net capital expenditure for the period amounted to R24.7-million, a large portion of which related to the construction of ARB Electrical’s new Nelspruit premises, which was completed in January, and the new Rustenburg premises, on which work started in April.
The investments into these new branch premises contributed to an increase in the market value of ARB’s portfolio, taking it to R163-million, up from R155-million previously.
ARB added that its financial position remained robust with a net asset value a share of 303.15c and a net ungeared cash position of R197.6-million.
DIVISIONS
During the year, ARB Electrical grew its revenue 12% to R1.88-billion, while its operating profit was up 37% to R138.6-million, which improved the division’s operating margin to 7.4%, from 6% previously.
The lighting division achieved revenue and operating profit growth of 25% and 30% respectively, supported by the introduction of new product categories and key customer gains.
ARB’s corporate division, which represented the group’s ungeared property portfolio, the centralised treasury function and ARB IT Solutions, posted a 9% decline in revenue, while operating profit was down 11%; however, the company said this was in line with expectations.
Moving forward, ARB said it would maintain its focus on driving operational efficiencies in its existing businesses, as well as continue to evaluate strategically aligned trading and distribution related acquisitions, as headwinds in the industry were expected to continue.
ARB declared a dividend of 20.1c a share for the year, up 24% on that of the prior year, as well as a special dividend of 10c a share.