ARB Corporation splashes out $39m on UK acquisition

ARB Corporation splashes out $39m on UK acquisition

After more than doubling its profit in the December half thanks to a rebound in 4WD and SUV touring, Melbourne-based vehicle accessories maker ARB Corporation (ASX: ARB) has today announced a useful add-on of its own.

As a company led by the brothers of its founder Ronald Brown, ARB is building on recent export growth with the acquisition of a founder-led company in the UK - Auto Styling Truckman Group, the country's leading manufacturer and distributor of utility accessories.

Truckman is particularly known for accessories on the rear of vehicles such as hard top canopies and bed liners, among other products.

ARB notes the purchase price will be worth a maximum of £21.9 million (AUD$39 million), of which £10 million is payable on completion with deferred payments of £4 million as well as £7.9 million subject to three-year performance targets.

Founded in 2002 and with 80 staff, post-completion Truckman will continue to be run at its Birmingham headquarters by founder and chairman Michael Wheeler and managing director Richard Langman.

The purchase is being funded from ARB's existing cash resources and the business is expected to operate profitably from the commencement of ARB ownership, effective 2 March 2021.

The ARB board highlights the acquisition provides a base for the group in Europe's largest utility vehicle market. This follows on from a stellar last six months of 2020 when exports were ARB's fastest-growing source of revenue, accounting for 34.7 per cent of sales.

"Growth was achieved from all export sales and distribution operations in Australia, the USA, the Czech Republic, the UAE, Thailand and New Zealand," chairman Roger Brown said in a letter to shareholders in February, following a 113.5 per cent lift in net profit after tax (NPAT) to $54 million.

In the half the company also notched a 21.6 per cent jump in sales revenue to $283.9 million, of which the Australian aftermarket continued to make up for the majority of sales.

"Sales to the Australian aftermarket grew by a respectable 14 per cent," Roger Brown said.

"Sales growth was above average in New South Wales, Queensland, Western Australia and Tasmania, slightly below average in South Australia and relatively flat in Victoria which was impacted by a prolonged COVID-19 related shutdown during the first half of the financial year.

"The sales growth was achieved despite a decline of 3.4 per cent in sales of new vehicles in ARB's target market, including medium to large SUVs and four-wheel drive utilities."

He said there had been a recovery in the market due to pent up demand created during the early lockdown periods, an increased trend towards local touring in many countries and the impact of governments' financial stimulus on consumer demand and confidence.

It was a set of circumstances that has lifted ARB's share price to record highs this year, now 74 per cent higher than they were pre-COVID with a market capitalisation of $2.7 billion.

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