ARB CEO bemoans lack of major infrastructure spending
CEO Billy Neasham remains confident that ‘the group is well positioned and has the resources to continue to build customer loyalty’
Electrical wholesaler and lighting distributor ARB Holdings on Friday bemoaned the lack of major infrastructure spend and weak construction sector, which weighed heavily on its financial results.
ARB is one of Southern Africa’s largest distributors of electrical products such as power and instrumentation cables and overhead line equipment and conductors.
Speaking after the release of the company’s results for the six months to end December, in which the company’s headline earnings per share slumped 38%, CEO Billy Neasham said ARB did not foresee an improvement in its trading environment because of the fragile economy.
“We remain confident that the group is well positioned and has the resources to continue to build customer loyalty, to secure a fair share of the limited project opportunities available and remain capable to take advantage of any improvement in trading conditions when the SA economy improves,” Neasham said
He described the interim period as incredibly difficult because of the limited infrastructure development. Neasham said during the period the company also experienced shortages of power cables as a result of a fire at a Phalaborwa mine. “As a result, manufacturers were not getting copper supplies in time. Distributors such as us did not have enough stock,” he said.
The company’s electrical business took strain from the lethargic investment in infrastructure and development. Neasham said the entry of cable manufacturer Aberdare into the contractor market as well as the reduction in Eskom’s spend in electrification project stifled the business’s performance.
“This has been partially mitigated by leveraging off good customer relationship to retain business in the declining market,” Neasham said.
Operating profit slumped 15% to R92m. The electrical unit’s operating profit decreased 26.9% to R51.9m. Its revenue was down 1.8%.
The lighting business increased revenue by 13.4%, while its operating profit was up 1.1% to R27.2m.
ARB said the addition of Radiant would enable the group’s lighting business to gain market share. The Radiant deal became effective on January 1 2019.
The market, however, shrugged off the company’s indifferent performance as its stock rose 9.79% to R4.60 on Friday — its biggest single-day increase since August 22 2018.