Durban-based ARB Holdings – which has investments in electrical wholesale, lighting and property – on Friday reported a 3% increase in its Headline Earnings Per Share (Heps) to 59.96 cents for its full-year to the end of June.
This came despite the JSE-listed group taking an exogenous shock from the Covid-19 pandemic fallout in the last quarter of its financial year. Nevertheless, ARB has opted not to declare a dividend, raising concerns that South Africa’s economic recovery to take up to three years.
The group, which marks its 40th year of operation this year after being founded by Alan Robert Burke out of a shipping container in Richards Bay (KZN), said revenue was down 13.1% to R2.35 billion compared to the prior financial year.
ARB added that despite the devastation of Covid-19, the group’s operating profit was only down 6.1% to R145.9 million. Cost savings and higher margins helped mitigated the impact of the Covid-19 fallout and related lockdown.
“Taking cognisance of the views expressed by economists, it is the view of the board that it will take at least two to three years to get back to the level of activity prior to the lockdown necessitated by the Covid-19 pandemic,” Billy Neasham, ARB Holdings’ CEO said in a statement.
The group owns majority stakes in ARB Electrical Wholesalers as well as lighting firms Eurolux and Radiant Lighting. Burke remains a key shareholder in the group, through the Burke Investment Trust and Alan Burke Investment Trust.
Considering the expected recovery period for South African economy, Neasham pointed out that the group’s “evaluation of the future cash flows necessitated a write down of the Eurolux trademark and CraigCor goodwill” as well as “an impairment in the value of certain properties”.
He said this had also negatively impacted the earnings of the group.
“Given the economic uncertainties which continue to prevail, the board is of the view that we must continue to preserve cash in the short term and took the decision to waive the declaration of a dividend at this time,” added Neasham.
He noted that the group’s cash resources stood at R151.9 million.
Neasham said that the 2020 financial year “would be well remembered, albeit for the wrong reasons”.
“In the nine months up to March 2020, the South African economy, on which the group is largely dependent, failed to show any growth and continued to be hamstrung by the collapse of business confidence,” he added.