ARB Holdings confident about the prospects of added diversity

ARB HOLDINGS said yesterday that it remained confident about its prospects going forward with recent acquisitions expected to add diversity in the group.

At the beginning of February, ARB acquired 60 percent of Craigcor Distributors for a potential maximum amount of R30 million through its subsidiary, ARB Electrical Wholesalers.

Craigcor is a distributor of Rockwell Automation products, with primary areas of responsibility in Gauteng, the Western Cape, Namibia and Zambia. Chief executive Billy Neasham said the acquisition was small, but important for the company.

“We want to build on this acquisition, because it allows us to enter areas where we were not represented before,” Neasham said. He added that the group continued to evaluate acquisition opportunities.

ARB is an investment and property holding company with investments in closely related trading and distribution businesses. It operates two divisions: electrical and lighting divisions.

In the results for the six months to December, the group reported a 5.4 percent increase in revenue to R1.34 billion, up from R1.27bn, while operating profit increased by 3 percent to R107.4m, up from R104.5m as compared to last year. The group also reported a 35 percent jump in profits to R88.6m, up from R65.4m, and headline earnings per share grew by 34 percent to 37.62 cents a share as compared with last year’s 28.07c.

The group said its results were positively affected by a decrease of R13.8m in the International Financial Reporting Standards fair value of the put option liability, arising from the option issued to the minority shareholders in Eurolux.

The electrical division was able to grow its turnover marginally through the expansion of its Connect branches and the successful pursuit of a number of projects, while the lighting division’s turnover decreased due to retail customers dropping stock levels in line with a decrease in demand.

“Changes in our product mix and the emphasis on ensuring trading disciplines were maintained had positive effects on the results,” Neasham said. The group said it continued to be cash-generative, was ungeared and has net cash on hand of R226.6m, up from R174.9m as compared to last year.

The electrical division was the best performer and it managed to increase its revenue by 8.7 percent with operating profit gaining 12.8 percent.

ARB’s shares gained 12.76 percent on the JSE yesterday to close at R5.48.