ARB delivers solid earnings in tough conditions
ARB Electrical Wholesale has reported an 37 per cent headline earnings per share increase year on year, surpassing pre pandemic levels by 42 per cent. The company says its major divisions have been impacted by international supply challenges, with the lighting division suffering the most. Joining CNBC Africa for more is Billy Naesham, Financial Director at ARB.
Thu, 19 Aug 2021 10:47:32 GMT
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AI Generated Summary
- ARB Electric Wholesale reports a 37% increase in headline earnings per share year on year, surpassing pre-pandemic levels by 42%.
- The company attributes its success to strategic decision-making and strong management focus, allowing it to capitalize on market opportunities.
- Maintaining optimal stock levels, addressing supply chain issues, and managing copper price fluctuations are critical factors contributing to ARB's performance.
ARB Electric Wholesale has recently announced a significant 37% increase in headline earnings per share compared to the previous year, exceeding pre-pandemic levels by an impressive 42%. Despite facing challenges in its major divisions due to international supply chain issues, the company has managed to excel in a tough operating environment. Billy Nation, the Financial Director at ARB, discussed these outstanding results in an interview with CNBC Africa.
Nation attributed the success to strategic decision-making and a strong management focus that enabled ARB to capitalize on existing opportunities. He emphasized that while the economy has not fully recovered to pre-pandemic levels and occasional lockdowns still pose challenges, the company's performance has been remarkable.
One of the key factors driving ARB's growth was its ability to maintain sufficient stock levels during the initial lockdown period, particularly in the electrical division. By ensuring timely supply to customers and meeting their demands, the company was able to gain market share and build goodwill. Nation acknowledged that supply chain issues, especially in the lighting division, continue to be a concern but highlighted the importance of optimizing stock levels to meet customer needs.
In response to questions about managing the supply chain and enhancing localization, Nation explained that ARB largely relies on local manufacturers for its electrical products. However, challenges such as shortages of key raw materials like copper, PVC, and steel have affected the supply chain. To mitigate these challenges, the company focuses on leveraging available stock products when feasible, while also maintaining a balance to avoid overstocking.
The discussion also touched on the impact of copper price fluctuations on cable sales. Nation acknowledged the volatility of the copper market and highlighted the importance of managing copper-related risks. The increase in copper prices has positively impacted ARB's sales and margins, contributing to a stronger bottom line. However, he cautioned that the long-term effects of price increases on cable sales remain uncertain, particularly as supply and demand conditions evolve post-pandemic.
Overall, ARB Electric Wholesale's exceptional earnings growth signals resilience and adaptability in navigating challenging market conditions. The company's strategic approach to managing supply chain disruptions and leveraging market opportunities has proven effective in driving success and outperforming expectations.