ARB –13%: The stock fell after 1H FY26 results came in softer year-on-year, reflecting a tougher domestic and OEM backdrop, but the underlying message was better than the headline suggests. Management reiterated confidence in a second-half improvement, supported by a healthy order book and strong offshore momentum.
1H26 highlights
- Net income: $42.2m (-17% y/y) – in line with recently downgraded expectations
- Revenue: $358.0m (-1% y/y) – below consensus of $367.8m
- Interim dividend: $0.34 (flat y/y), ahead of $0.30 consensus
- Australasia: $270.7m (-6.2% y/y)
- US: $50.3m (+29% y/y)
- Middle East / Europe / UK: $32.9m (+1.3% y/y)
- Thailand: $8.4m (+26% y/y)
The miss was driven by domestic operations whick remain challenging, with OEM sales down 38% as customers worked through elevated inventories from 2H FY25 amid weaker new-vehicle demand.
Importantly, ARB has not lost OEM contracts; the shortfall is timing and inventory related rather than structural.
Management expects 2H FY26 to improve versus the first half and trade closer to the prior corresponding period. Assuming 2H NPAT of ~45m, FY26 NPAT should land ~$87m, which is around 4% below consensus. Margins were guided to be broadly in line with 2H FY25 and the order book is healthy, with daily intake near historical highs, and exports—particularly the US—remain a standout, supporting growth into 2H.
While near-term domestic headwinds persist, the share price reaction today looked an overreaction.
MM is bullish towards ARB around $20.
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