ARB Corporation (ASX:ARB) Down 15% as Margins Reset and Earnings Slide

ARB Corporation A Small Revenue Dip, A Big Profit Hit, Here’s Why

ARB Corporation had a sharp 15% fall today after its result, with the numbers showing a clear reversal in revenue momentum and profitability.

From our read, demand itself was not the main problem. The bigger issue was margin pressure as costs normalised, which brought earnings back down after a stronger period. ARB is an aftermarket accessories business for 4WDs and touring, basically the gear people buy for camping, fishing, and off road setups, so profitability can swing meaningfully when the cost base shifts.

Sales revenue came in at $358 million, down 1%, while profit before tax was $57 million, down 18%. That spread is important, a modest revenue decline translated into a much larger earnings decline, which tells you margins and operating leverage did the damage.

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OEM Collapses, US Grows, The Mix Shift Story

On geography, ARB Corporation Australian business was down 1.7%, which management attributed to lower vehicle volumes. Offshore demand looked healthier, with exports up 8.8% and US sales up 26%. The US e commerce platform acquired in 2024 also appears to be supporting that growth, which tells me international momentum is still there.

One weak spot worth calling out was OEM. OEM sales fell 38.2%, down $11.2 million. ARB’s commentary was that OEM customers entered the half with higher inventory, and weaker vehicle sales then compounded order reductions. To us, that reads like a clean signal that end demand has softened and that customers are being more cautious with stock levels. It also fits the broader backdrop of cost of living pressure in Australia weighing on discretionary categories like automotive.

Cash flow also needs a bit of context. Operating cash flow lifted sharply, but a meaningful driver was receivables unwinding, essentially cash collection catching up as amounts owed by customers flowed through. That is positive mechanically, but it is not the same as a step change in underlying earnings power.

What likely spooked the market is management’s tone on the near term. They are expecting a similar result in 2H, which implies the margin and demand pressures are not a one off. The Australian aftermarket remains challenging due to vehicle supply and fitment constraints, even though order intake is still close to historical highs. So the demand signals are mixed, but the reality is that constraints and margin pressure are currently winning in the reported numbers.

The Market Hates “Same Again” Guidance

Investors should keep a close eye on US momentum, because it can act as a genuine hedge if Australian growth stays sluggish. The ARB Corporation US channel is still scaling, and if ARB can keep building brand awareness and distribution there, it becomes an increasingly meaningful offset to a softer domestic cycle.

we also think the direct to consumer e commerce launch in Australia is an important medium term lever. Over time, it should improve customer capture, lift repeat purchase rates, and give ARB better first party data on what customers are buying, when they are buying, and how they are responding to promotions and new product releases.

Finally, the balance sheet remains strong, which matters in a period like this. It gives management flexibility to keep investing through the cycle, protect dividends, and stay disciplined while the domestic market normalises.