ARB Shares Jump on Strong Earnings Upgrade

By Glenn Dyer | More Articles by Glenn Dyer

A trading update from automotive accessory group, ARB boosted the small listed sector yesterday.

The company, which makes add on parts for vehicles, especially four wheel drives and tradie utes, told the ASX that it is looking at reporting record revenues and earnings for the six months to December.

The company said it expects to report a 21.6% jump its unaudited sales for the first half had grown to $284 million.

Profit before tax is also expected to rise significantly to between $70 million and $72 million, double the $35 million the company reported in the prior corresponding half.

The update saw ARB shares end Tuesday’s trading up 5.7% at $33.47.

The news boosted shares in Super Retail Group by 5.4% to $11.56 and a smaller rise in the share price for Bapcor which closed up 1.5%.

That performance for the small sector stood out in a wider market that fell for a second day in a row. The ASX 200 lost 0.27% after Monday’s bigger fall.

But it is another part of the market to tipped investors that things will be brighter than thought when reports appear next month.

Beacon Lighting has issued a similar upgrade, as has furniture retailer, Nick Scali and car dealer, Eagers group, while The Shaver Shop and Accent Group (shoes) have added upgrades of their own.

ARB’s mooted results are not as good as it looks as  nearly $10 million of ARB’s profits are due to non-recurring government benefits such as the JobKeeper subsidy and similar subsidies in New Zealand.

The company attracted controversy last year after it used wage subsidies to maintain its dividend payout.

“The company maintains a positive short-term outlook based on a strong customer order book and another record sales month in December 2020,” ARB said in Tuesday’s statement.

And for those investors trying to project this solid rise to the rest of 2020-21, should think again.

ARB warned that its “first-half performance should not be used as an indicator for the second half of the financial year, for which no guidance can be provided, as it remains far too uncertain to predict in the current economic climate.”

 

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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