DURBAN – Investment and property group ARB Holdings has blamed the decline of infrastructure expenditure and slow growth in the local economy for the falling of its fortunes after it posted an 18.8 percent decline in earnings for the year to end June. 

The group said its electrical division particularly took the knock as overhead supplies to Eskom eased.

ARB said its headline earnings per share fell to 58.20 cents during the period from 71.70c last year. 

Chief executive Billy Neasham said indirect supply of overhead line products to Eskom through contractors declined substantially with few electrification projects awarded during the year. 

“We believe that this sector will show growth as the need to electrify rural areas remains a priority of the national government. Consequently, this division acquired GMC Powerlines effective March 1,” Neasham said. 

Revenue in the electrical division decreased 1.1 percent while operating profit declined by 33.7 percent.

Neasham said the challenges which occurred with major companies in the construction sector were now being felt in electrical wholesale operations.

“However, this division benefited from a strong performance by CraigCor, which was acquired in February 2018, and which showed significant growth and countered the poor performance of the electrical wholesale operation,” he said. 

GMC is an importer of overhead line products, a number of which are included on the Eskom LAP list, and are also promoted for sale to other African countries.

ARB Holdings also owns investments in related trading and distribution businesses. Its major investments include 74 percent of ARB Electrical Wholesalers, which operates 26 electrical wholesale branches and 60 percent of Eurolux, which imports and distributes light fittings, lamps and related accessories. 

The group said revenue increased 4.5 percent  to R2.7 billion on the inclusion of the CraigCor acquisition for a full year and Radiant for six months. 

It said operating profit fell 24 percent to R155.4 million, with operating margin declining to 5.7 percent, largely caused by the poor performance from the electrical wholesale business. Profit  slowed 24.3 percent to R145.17m. 

The group maintained its dividend of 25c a share.

“The results were disappointing and they reflect the poor state of the economy in our country,” Neasham said. 

However, Neasham added that the group remained profitable and cash generative, ensuring that it was adequately positioned to take advantage of any significant upturn in the economy. 

The lighting division increased its revenue 29.3 percent while operating profit declined by 22.9 percent. 

The group said revenue was positively impacted by the inclusion of Radiant’s turnover for the six months to June. 

ARB shares closed unchanged at R4.20 on the JSE on Thursday.