CAPE TOWN - Investment and property holding company ARB Holdings increased revenue 4.5 percent to R2.7 billion in the year to June 30, helped by the inclusion of industrial automation and control equipment distributor CraigCor for a full year, and lighting company Radiant for six months.
“The continued low growth environment and unstable local economy made for tough trading conditions, which we don’t expect will change in the coming months. This was a disappointing performance given extremely challenging circumstances,” CEO Billy Neasham said in a statement Thursday.
The total gross margins percentage improved slightly, mainly due to the change in product sales mix, with the introduction of Radiant for six months. The electrical wholesale operations’ margin fell as a result of competitive pressures from the reduced trading opportunities.
This resulted in a R35.3 million increase in gross profit. Operating profit was down 24.2 percent to R155.4m, with the operating margin declining to 5.7 percent from 7.9 percent. This was largely due to the poor performance of the electrical wholesale business.
Headline earnings a share declined by 18.8 percent to 58.20 cents. The dividend was maintained at 25 cents a share.
“Divisional revenue remains hampered by the lack of any real economic growth or infrastructure expenditure. The challenges that have occurred with the major companies in the construction sector also negatively impacted the electrical wholesale operation,” said Neasham, adding the division had benefited from a strong performance by CraigCor, acquired in February 2018, which showed significant growth.
Another challenge had been a lack of copper supplies by the cable manufacturers in the first half of the financial year, which resulted in short supplies of certain products.
In addition, a change in strategy of a major supplier, which was now directly supplying ARB’s customers, together with the decline in the number of projects available, had put ressure on margins.