Highlights

• FY26 sales Revenue fell 3.8% to $702.0 million, while profit before tax fell 8.9% to $123.0 million.

• Shareholders voted against the remuneration report at the 15 October 2026 AGM, a first strike under Australia's two-strikes rule.

• Original equipment sales fell 27.2%, while Underlying Profit before tax improved in the second half.

• Management plans to keep investing, with three new Australian stores, five flagship upgrades and engineering spend rising 10% to 15% a year.

What happens when a company long regarded as a steady compounder reports lower Earnings and its shareholders start to push back? ARB Corporation (ASX:ARB), the Melbourne-based maker of four-wheel-drive accessories, is in that position. At its Annual General Meeting on 15 October 2026, 41.3% of votes cast opposed the remuneration report, a "first strike" under Australia's two-strikes rule, after a year in which sales and profit both fell.

It also sets up a test: a second strike at the 2027 AGM would trigger a vote on whether to spill the board.

What ARB sells and where its money comes from

ARB designs, manufactures and distributes accessories for four-wheel-drive vehicles, from bull bars and canopies to suspension, winches, fridges and air lockers. Much of its Manufacturing is in Thailand, with engineering in Australia, which leaves its costs exposed to the Thai baht.

In FY26 (the year to 30 June 2026) the Australian aftermarket produced 55.6% of sales, exports 38.2% and original equipment work for vehicle makers 6.2%. The local Business runs through a network of 80 ARB stores, 33 of them company-owned, plus independent retailers.

Demand is closely tied to new vehicle sales. Buyers of utes and large SUVs such as the Toyota HiLux, Ford Ranger and LandCruiser often fit accessories soon after purchase, so Supply of those models matters a great deal.

A softer FY26, with a better second half

ARB reported FY26 sales revenue of $702.0 million on 25 August 2026, down 3.8%. Profit before tax fell 8.9% to $123.0 million and net profit after tax fell 5.2% to $92.4 million. Excluding one-off items, underlying net profit was $89.0 million, down 7.5%.

The weakest area was original equipment, where sales dropped 27.2% to $43.4 million amid supply constraints and a gap between vehicle model cycles. Australian aftermarket sales fell 3.3%, while exports edged up 0.5% to $268.4 million, with growth in North America and Asia offset by declines in the UK and New Zealand.

The shape of the year was more encouraging than the total. Underlying profit before tax was $58.0 million in the first half and $60.7 million in the second, after a stronger baht and lower factory overhead recoveries squeezed margins early in the year. Chairman Robert Fraser's letter to shareholders said gross Margin had since recovered to FY25 levels.

Management's outlook at the result was cautiously positive. It pointed to an encouraging Australian order book, improving supply of key 4x4 models, positive export trading and an expected recovery in UK registrations, while noting that Middle East sales remained affected by regional conflict. Original equipment sales were expected to improve, subject to supply chains and platform timing.

Cash, dividends and spending

ARB ended June with $47.9 million in cash and no debt. Operating Cash Flow fell 19% to $103.7 million as more money was tied up in working capital, Capital Expenditure was $36.6 million and dividends paid totalled $83.6 million.

Ordinary dividends for FY26 were unchanged at 69 cents a share, fully franked, including a 35-cent final paid on 23 October 2026. The prior year had also included a 50-cent special dividend, which was not repeated.

Management intends to keep investing. It has said engineering spending will rise by 10% to 15% a year, and FY27 plans include three new stores and five flagship upgrades in Australia.

Overseas bets: the US, China and Africa

Growth outside Australia is central to ARB's strategy. In the United States it moved its west coast distribution centre to California and is rolling out store-in-store displays across the 4 Wheel Parts retail network, run by a joint venture in which ARB holds 50%. A summary of the results presentation put ARB USA's sales growth at 13.5% in local currency.

ARB also began operating a wholly owned business in China late in FY26 and expected a South African Subsidiary to start trading in the first half of FY27. It has won contracts with two new US vehicle makers, one for an electric platform. US Import tariffs remain a headwind the company has flagged.

The AGM and the start of FY27

The AGM's other resolutions passed, including the re-election of founder Roger Brown, while long-serving director Andrew Stott retired. Fraser said the board would take shareholders' comments seriously.

The competitive field

ARB's brand, engineering depth and retail footprint give it an edge in Australia, but it competes with lower-cost importers, vehicle makers' own accessory ranges and large US aftermarket players. Its scale overseas remains small relative to those markets.

Risks and what to watch

The biggest swing Factor is new vehicle supply. Toyota has indicated better availability of key models in FY27, which ARB expects to help aftermarket and original equipment sales, but timing is outside its control. Currency moves, particularly in the baht, US Tariff policy and conflict affecting Middle East exports are further risks.

Investors will also watch how the board responds to the first strike, whether the second-half margin recovery holds, and whether the new China and South Africa operations add meaningfully to sales. The next scheduled update is the half-year result, expected in late February 2027.