Morningstar sees ARB Corp's slowing sales growth as signal to tougher FY23

ARB

24/08/2022 02:12

** Brokerage Morningstar sees Australian vehicle accessories
maker ARB Corp Ltd's  ARB.AX  slowing sales growth as a signal
to tougher environment in FY23 
    ** ARB posted FY22 NPAT of A$122 mln ($84.35 mln) and
flagged weak start to H1 of FY23  urn:newsml:reuters.com:*:nFWN2ZY2GY
    ** Morningstar expects sales growth to prove more muted in
FY23 as "travellers take to the skies for holidays and
four-wheel driving loses some of its fan status as life sans
COVID-19 restrictions on other activities lift"
    ** Brokerage expects underlying sales growth to remain
relatively strong in the medium term, buoyed by "international
expansion—particularly in the U.S."
    ** Morningstar expects ARB to experience margin pressure in
the near term as "inflation drives higher operational costs,
including elevated prices in steel, shipping, and labour"
    ** Brokerage forecasts average profit before tax margin for
ARB lowering to 21% from FY23 and lowering below 19% from FY24 
    ** Morningstar still expects longer-term margins for ARB to 
exceed prepandemic margins of around 17% in FY19
    ** Six of eight analysts rate the stock "buy" or higher and
two "hold"; their median PT is A$37.13 – Refinitiv Eikon data 
    ** ARB shares are trading up 0.5% at A$32.27 and have fallen
38.8% YTD, as of last close 
    



($1 = 1.4463 Australian dollars)

 (Reporting by Riya Sharma in Bengaluru)
 ((Riya.Sharma@thomsonreuters.com;))