ARB Corporation Limited

For the 6 months ended 31 December 2025, ARB reported sales revenue of $358 million, down 1% year over year. Reported profit before tax was $57.1 million, down 18.8%, and reported profit after tax was $42.2 million, down 17.2%; earnings per share declined 17.9%. Underlying profit before tax fell 16.3%, with lower gross profits the main driver. Materials and consumables used rose by $6.9 million, and materials and consumables represented 43.7% of sales versus 41.4% in the prior half. Operating cash flow was $63.9 million, capex was $11.7 million, and year-end cash was $59.4 million with no debt. The board declared an interim fully franked dividend of $0.34 per share, a 67.2% payout ratio, payable on 17 April 2026. Looking ahead, management said second-half sales margins are expected to be broadly in line with the second half of FY 2025, helped by Thai baht hedging and a 3% average price increase that started in February. They also said second-half financial performance should improve relative to the first half of FY 2026 and trade closer to the prior corresponding period.

Lachlan McCann emphasized that the business is still seeing strong customer demand, but near-term results are being constrained by vehicle supply, fitment labor shortages, and product-mix pressure. He highlighted priority growth areas including the Ford Super Duty, Toyota HiLux, the new eCommerce site, and continued U.S. expansion through ORW/4 Parts, Poison Spyder, and a new West Coast facility in Norco. His tone was constructive but realistic: he repeatedly said some channels remain challenged, while also stressing that ARB has a long runway for store expansion, export growth, and brand-led gains.

Damon Page focused on the mechanics behind the margin decline: a weaker Australian dollar against the Thai baht, lower factory overhead recoveries, and a materials-and-consumables ratio of 43.7% of sales versus 41.4% a year ago. He noted depreciation rose $2.4 million, or 16%, due to elevated capex, while employee expenses were flat at $90.5 million and operating expenses were generally contained. On cash, he said operating cash flow was $63.9 million, capex was $11.7 million, dividends paid were $59.3 million, and the company ended with $59.4 million in cash and no debt. He also said the company has largely hedged its Thai baht exposure for the second half and expects pricing benefits from the February increase to flow through later in the half.

In Q&A, the main focus was margin recovery, with management saying the FX and recovery drag should reverse if the Thai baht strengthens, though not as sharply as the decline because the current rate is still below last year’s level. They clarified the February price increase was about 3% on average, not 4% to 5%, and said the benefit should mainly show up in late April through June. Analysts also asked about weak EMEA performance; management said it was partly due to a major distributor’s health issue and succession-related disruption, plus softer aid-and-relief funding and some African customer issues. Questions on BYD Shark versus Super Duty/HiLux led management to say engineering resources are finite and they are prioritizing models with higher expected accessory attachment rates.