ARB’s plan lights up double-digit growthComment on this story
ARB HOLDINGS posted double-digit growth in revenue for the year to June on the back of a strategy adopted five years ago to increase its footprint and get the basics of distributing and wholesaling in place, chief executive Byron Nichles said yesterday.
The independent distributor of electrical and lighting products increased revenue by 14 percent to R2.22 billion. With well-controlled overheads ARB was able to increase operating profit by 27 percent to R203 million.
Headline earnings a share increased 27 percent to 50.28c from 39.55c in the prior year.
ARB remained ungeared with R198m cash in hand, giving the group appetite for valuable acquisitions in the future.
ARB is a distributor and wholesaler of electrical cables and overhead transmission line equipment and low-voltage products as well as retail lighting products such as Eurolux.
Its electrical division grew revenue by 12 percent to R1.8bn after a disappointing fourth quarter as a result of prolonged public holidays, strikes and a slowdown in Eskom’s electrification projects.
Nichles said the sound performance was a continuation of what the company had delivered in the past. “This kind of growth is a reflection of plans that have been put in place over the last few years, which included growing the business by opening up new branches and making sure that we get our stock levels right by focusing on having the right stock in the right places.”
When the company listed on the JSE in 2007 it had six branches in four provinces. It has grown to 18 branches countrywide.
“Our priority was to make sure that we are represented in all nine provinces. Now that we have done that, we are looking at increasing our branches in economic hubs such as Gauteng and the Western Cape, among other provinces,” Nichles said.
Five years ago ARB put a strategy in place to open as many branches as possible in order to increase market share and explore new markets.
Nichles maintained that this strategy was now paying off.
“On our network increase we have made sure that we have the right penetration of the market. And we have seen the benefit of that come through,” he noted.
Two years ago ARB bought lighting company Eurolux, which, Nichles said, had continued to steal market share.
The group’s lighting division grew revenue by 25 percent to R350m and the unit’s profit went up by 30 percent.
“The lighting division is certainly gaining market share and popularity among retailers as well as consumers, with Eurolux experiencing 25 percent growth, something which our competitors have not yet achieved,” he said.
ARB was one of many companies affected by the strikes in the platinum belt and the metal fabrication sector. “At some point we could not get stock from our suppliers and they were also not able to buy some of the supplies as factories were not running,” Nichles said.
Looking ahead, Nichles said ARB would focus on organic growth as well as acquisitive strategies. “We will try and build on our efficiencies and increasing our market share through branch expansions,” he said.
The group was also looking to buy valuable companies that would match its portfolio. It also had plans to diversify its Eurolux products.
Its African operations generated about 10 percent of revenue from exporting electrical goods.
ARB’s share price increased by 5.01 percent to close at R7.75 on the JSE yesterday.