ARB expects good growth on 4WD sales

Automotive group ARB Corporation Ltd expects good growth in the current financial year as sales of big four-wheel-drive vehicles (4WDs) revive.

ARB manufactures, distributes and sells 4WD motor vehicle accessories, including differentials, bullbars, and suspension products.

"ARB anticipates achieving further good growth in 2007/08," the company said in a presentation to shareholders at the annual general meeting this week.

ARB's traditional customers are the owners of large 4WDs such as Toyota Landcruiser, Nissan Patrol, and Land Rover Discovery, and 4WD utilities such as Holden Rodeo, Toyota Hilux and Nissan Navara.

The company said sales of large 4WDs had fallen over the last five years, while those of 4WD utilities had risen.

"Over the next few years, we believe the sales of larger 4WDs will make a solid comeback," ARB said.

"This will result from the release of new models powered by more efficient turbo diesel engines."

There was good growth in sales to aid and relief agencies, to the oil, gas and mining sectors, and to various areas of conflict around the world.

ARB said fuel prices were a major influence on its business, and rising fuel prices had affected the type of 4WD most favoured by customers.

Smaller turbo diesel-powered dual-cab pick-ups were now the most important market segment.

"This trend is continuing and the total number of new vehicles sold for which we provide accessories is increasing," ARB said.

ARB said the profitability of its United States subsidiary, Air Locker Inc, had been severely affected by the rapid fall in the value of the US dollar in the last quarter of 2006/07.

But cost reductions through ARB's Thailand plant, small price increases and other cost reduction strategies should enable profitability to be restored in the medium term.

"Obviously, this is highly dependent on the strength of the Australian dollar," ARB said.

ARB also told shareholders that the shortage of labour in Australia had become critical and now extended beyond the skilled factory labour.

"Unskilled labour is becoming more difficult to find. All staff vacancies are becoming difficult to fill," ARB said.

"This applies to factory personnel, fitters and mechanics, sales staff, administration staff and warehouse staff.

"Labour shortages are more pronounced in areas where mining is booming."

ARB booked an annual net profit of $15.8 million for 2006/07, which was up 17.3 per cent on the prior year if gains from property sales are excluded from the prior year's result.

Sales revenue in fiscal 2007 lifted 16 per cent to $146.1 million.

ARB shares closed one cent lower to $4.12.

Source: AAP 2007

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