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ARB (ASX:ARB) share price struggles following FY21 results

Demand delivers strong revenue and earnings growth in FY21 for ARB…
The post ARB (ASX:ARB) share price struggles following FY21 results appeared first on The Motley Fool Australia. –

The ARB Corporation Limited (ASX: ARB) share price is relatively flat on Tuesday after posting its full-year results. Shares in the four-wheel-drive accessories manufacturer are sitting around $48.48.

The company’s full-year result revealed an impressive doubling in profits on the back of strong demand for its products.

Let’s take a closer look.

ARB share price ahead on significant revenue and earnings growth

Sales increased 34% on the prior year to $623.07 million
Total revenue lifting 34% to $625.86 million in FY21

Earnings per share (EPS) up by 95% year-over-year to 140 cents per share
Fully franked final dividend of 39 cents per share, up 86% from the prior corresponding period
Strong export sales growth of 50.2% compared to the previous year
Cash on balance sheet increased by $43 million to $85 million as at 30 June 2021

What happened in FY21 for ARB Corp

The ARB share price is lifting ever so slightly on Tuesday after reporting its full-year results. Unsurprisingly, shares in the company are steady following its announcement. This is likely due to the final result being mostly in line with the company’s market update back in July.

According to the release, ARB achieved total revenue of $625.86 million during the financial period – representing an increase of 34% on the prior year. The increase was the result of strong sales growth across all customer categories, particularly export and original equipment categories.

An increase of 50.2% in export sales was the result of the company’s continued focus on overseas markets. This was exhibited by ARB’s acquisition of UK-based Auto Styling Truckman Group in March this year. The strength in its export market means the company now derives 36.7% of its total sales from overseas markets.

Meanwhile, ARB’s profit growth outpaced revenue growth during the year. This was due to higher gross profits driven by recoveries in overhead costs from increased volume and strengthening of the Aussie dollar against the Thai baht.

Additionally, the strong profit result and high levels of cash resulted in the board declaring a beefed-up dividend for shareholders. As a result, ARB intends to pay a final fully franked dividend of 39 cents per share — representing an increase of 86% on the previous year. This takes the company’s total dividends for the year to 68 cents per share fully franked. This might be giving the ARB share price a boost from dividend investors today.

What did management say?

Commenting on the result, ARB Chairman Roger Brown said:

Product development is a key element in maintaining ARB’s long-term competitive advantage. The Company will
further expand its research and development programme in 2021/22 and work is continuing on a number of exciting
long-term development projects that will provide future growth opportunities for the Company.

Significant engineering resources were used in developing comprehensive ranges of ARB and Old Man Emu accessories for the updated Toyota Hilux, the new Izuzu D-Max, the new Mazda BT-50 and the new Nissan Navara.

Additionally, looking ahead, Mr Brown said:

With its cash reserves and no debt, the Company is well placed to continue its investment in people, property,
distribution networks, machinery and businesses to facilitate ongoing growth.

What’s next for ARB Corp and its share price?

According to the FY21 release, ARB will have its hands full in the near term with various developments. Positively, the company holds a strong customer order book and considers the new car sales environment in Australia to be a good indicator for the near term.

At the same time, the company cautioned that the ongoing pandemic has created an uncertain economic environment.

Meanwhile, construction has commenced on ARB’s new 30,000 square metre factory. This factory will allow the company to increase production capacity and streamline operations.

The ARB share price has gained an astounding 121% over the past 12 months. Comparatively, the S&P/ASX 200 Index (ASX: XJO) has delivered 24% during the same period.

The post ARB (ASX:ARB) share price struggles following FY21 results appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ARB Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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