Despite its electrical division continuing to operate in an extremely challenging environment and the competitive environment its lighting division is facing, ARB Holdings remained cash generative in the six months ended December 31, reporting headline earnings a share of 27.79c apiece, up 12% from the 24.79c apiece it reported in the six months to December 2014.

The group further reported a 12.4% increase in revenue to R1.24-billion, with operating profit up 10.9% to R108.4-million. However, its operating margin remained almost unchanged at 8.8% of revenue.

CEO Billy Neasham told delegates at the company’s results presentation in Johannesburg that the results came on the back of the lighting division continuing to show pleasing market share gains, despite the volatility in the exchange rate.

The division’s operating profit increased 27.5% to R29.8-million, while the electrical division was able to grow its turnover, as well as increase its operating profit by 8.4% to R64.1-million.

“However, with limited trading opportunities, the gross margin continues to be under pressure,” added Neasham.

OUTLOOK
While the electrical division held short-term opportunities, owing to the run-up to municipal elections, a number of structural challenges remained in the economy.

However, the group remained positive, noting that it would expand this division mainly through new branch openings, while its lighting division’s growth depended on organic product extension.

Neasham further pointed out that being cash generative gave the group a “kitty for acquisitions”, a strategy the company would be focusing on in the year ahead.

He added that expanding into Africa was a particular area of interest and that the company had just appointed a representative in Zambia, where it was hoping to set up a permanent branch in future. However, Neasham said the company would cautiously approach the new territory.

ARB Holdings was also looking to expand its online footprint, establishing an online store – which would serve as a database of all its products – together with the roll-out of more of its Connect stores.

The group recently opened a store in Meadowdale, with Diep Rivier next on its agenda. This would bring the total stores in the country to 20. It aimed to have 30 stores in future.