ARB Faces Profit Pressure as Australian OEM Sales Plunge 38%
ARB Corporation’s half-year results reveal a modest sales dip driven by Australian OEM challenges, while robust US export growth offers a silver lining.
- Total sales revenue down 1.0% to $358 million
- Australian OEM sales decline by 38.2%
- US export sales increase by 26.1%
- Underlying profit before tax falls 16.3% to approximately $58 million
- Strong cash position with $59.4 million and no debt after dividend payments
Sales Performance, Mixed Channels
ARB Corporation Limited’s unaudited management accounts for the half-year ended 31 December 2025 show a nuanced picture. Total sales revenue slipped slightly by 1.0% to $358 million compared to the prior corresponding period. The decline was largely influenced by a sharp 38.2% drop in sales to the Australian original equipment manufacturer (OEM) channel, a consequence of contract timing and model release schedules previously flagged at the company’s October 2025 AGM.
Meanwhile, the Australian Aftermarket channel experienced a milder 1.7% sales decline, attributed to fitting capacity constraints that limited the company’s ability to meet demand in the second quarter. In contrast, ARB’s export channel delivered encouraging growth, with sales rising 8.8%, buoyed by a significant 26.1% increase in the key US market.
Profitability and Currency Impact
Underlying profit before tax is expected to be around $58 million, marking a 16.3% decrease from the previous year’s half. This figure excludes one-off items such as a $1.3 million gain from a property sale and $2.2 million in costs related to goodwill impairment following the termination of the Thule distribution agreement in November 2025.
Two main factors weighed on profitability, lower gross margins driven by an unfavourable currency dynamic between the Australian dollar and the Thai baht, and reduced factory overhead recoveries due to elevated inventory levels in the prior period. The Thai baht has remained relatively stable against the Australian dollar since January 2025, suggesting that currency effects may continue to influence the second half’s performance.
Balance Sheet and Dividends
ARB’s balance sheet remains robust, with cash reserves of $59.4 million and no debt at the end of December 2025. This strong liquidity position follows the payment of a final dividend of 35 cents per share and a special dividend of 50 cents per share during the period, totalling nearly $60 million in shareholder returns.
The company’s ability to maintain a healthy cash balance despite profit pressures and dividend payouts will be closely watched by investors as it navigates the challenges ahead.
Looking Ahead
ARB is set to release its full half-year results on 24 February 2026, which will provide audited confirmation of these preliminary figures. The company’s performance in the second half will likely hinge on the timing of OEM contracts, currency fluctuations, and the continued momentum in export markets, particularly the US.
Investors will be keen to see how ARB manages these headwinds while capitalising on growth opportunities abroad.
Bottom Line?
ARB’s resilience in exports cushions domestic setbacks, but currency and contract timing remain key hurdles.
Questions in the middle?
- Will ARB’s export growth sustain momentum in the second half of FY2026?
- How will currency fluctuations between the Australian dollar and Thai baht impact future margins?
- What are the prospects for new OEM contracts to reverse the Australian sales decline?
