Infrastructure slump hits ARB
Electrical wholesaler and lighting distributor ARB Holdings on Friday bemoaned the lack of major infrastructure spend and the weak construction sector, which weighed heavily on its financial results.
Electrical wholesaler and lighting distributor ARB Holdings on Friday bemoaned the lack of major infrastructure spend and the weak construction sector, which weighed heavily on its financial results.
ARB is one of Southern Africa’s largest distributors of electrical products such as power and instrumentation cables and overhead line equipment. In the six months to end December headline earnings per share fell 38%,
After posting results on Friday, CEO Billy Neasham did not foresee improvement in its trading environment. He said: “We remain confident that the group is well positioned and has the resources to continue to build customer loyalty, to secure a fair share of the limited project opportunities available and remain capable to take advantage of any improvement in trading conditions when the SA economy improves.”
Neasham described the interim period as incredibly difficult due to limited infrastructure development. The company also experienced shortages of power cables after a fire at a Phalaborwa mine. “As a result, manufacturers were not getting copper supplies in time. Distributors such as us did not have enough stock,” he said.
The electrical business took strain from the lethargic investment in infrastructure and development. Neasham said the entry of cable manufacturer Aberdare into the contractor market as well as the reduction in Eskom’s spend in electrification project stifled the business’s performance.
“This has been partially mitigated by leveraging off good customer relationship to retain business in the declining market,” Neasham said. Operating profit slumped 15% to R92m. The electrical unit’s operating profit decreased 26.9% to R51.9m. Its revenue was down 1.8%. The lighting business increased revenue by 13.4%, while its operating profit was up 1.1% to R27.2m.