Johannesburg - A slowdown in the South African economy and volatility in currency exchange rates has tested the resolve of investment and property holding company, ARB Holdings.
Despite these challenges, ARB Holdings managed to pull through and report increases in revenue for two of its divisions, Billy Neasham, the chief executive, said after the group released its interim results yesterday.
The company, which has investments in electrical wholesaling and lighting distribution, imports products in US dollars for its 60 percent stake in its Eurolux division. The rand depreciated by more than 13 percent to the dollar in 2015 alone.
The group consists of two divisions, the lighting and the electrical. Both divisions reported an increase of 19.8 percent and 12.2 percent increase in revenue, respectively, while the overall group revenue was R1.24 billion, up by 12.4 percent as compared with the same period last year.
Neasham said even though there had been a slowdown in Eskom’s lack of electrification projects recently, the company saw its earnings boosted by the local municipalities. “I think it is because of the upcoming local elections, which has boosted demand, particularly in the rural areas,” he said.
“I am pleased with the performance of the group, particularly given the challenges facing the South African economy. The lighting division continued to show pleasing market share gains, while the electrical division was able to grow its turnover in what has been an extremely challenging market,” he added.
The group reported an operating profit of R108.4 million, up by 10.9 percent from last year. Debtors grew 43 percent to R428.5m. With South Africa’s slowing economy, servicing debt can be an area of concern.
However, Neasham said the increase was not caused by a lack of payment, but “as a result of extended terms to specific contractors”, which had required a longer time frame to complete. “We also negotiated with our suppliers and this resulted in an increase of 38 percent.”
ARB has decided to put its Reuven property on sale for the price of R8.2m. Neasham said the move did not mean that the company had lost its appetite to acquire new assets.
“Our expansion plans are still on track and we continue to be on the lookout for small businesses that we can buy to expand our footprints locally. We are selling Reuven because it does not fit in with our existing portfolio,” Neasham said.
The group reported R190.9m cash on hand and headline earnings per share were up 12.1 percent to 27.79 cents.
ARB’s share price rose by 5.61 percent on the JSE yesterday to close at R5.27.
BUSINESS REPORT