Shares in ARB Corporation have plummeted by 13.7 per cent following concerns raised by Citi analyst Sam Teeger. The analyst suggests ARB should consider redirecting increasing dividends to resolve broader operational issues across the company, particularly in engineering and fitment. ARB Corporation specialises in the design, manufacture, and distribution of 4×4 accessories. The company’s products are sold both in Australia and internationally.
Teeger highlighted that ARB is currently facing significant operational headwinds. The company appears to be under-resourced in critical areas such as engineering and fitment, which has led to a prioritisation of Ford and Toyota models over those from BYD and Kia. This strategic choice, driven by resource constraints, has raised questions about ARB’s broader operational efficiency and its ability to meet diverse market demands.
Despite a recent 3 per cent price increase and strong export sales, ARB continues to grapple with capacity constraints, onboarding challenges, and persistent supply issues, particularly those related to Toyota. According to Teeger, a key discussion point during a recent conference call was the insufficient human resources ARB has in crucial areas.
Despite the concerns raised, ARB’s dividend remains unchanged at 34¢ a share, fully franked. Teeger believes that redirecting funds from increasing dividends into resolving the identified resource issues would be a more strategic move for the company’s long-term health.
