Highlights

  • ARB Corporation shares have declined over 44% in the past year, trading at AUD 17.53, well below Ord Minnett's Buy price target of AUD 31.00.
  • 1H FY2026 Underlying Profit after tax fell 14.4% to $43.2 million, impacted by a stronger Thai baht, lower OEM orders, and higher Depreciation.
  • US market growth of 26.1% and a healthy Australian order book heading into 2H FY2026 underpin management's expectation of improving performance in the second half.

ARB Corporation Limited (ASX:ARB) is Australia's leading manufacturer and distributor of four-wheel drive accessories, with a global footprint spanning Australia, the United States, Europe, and export markets across more than 100 countries. Its product range — including bull bars, roof racks, suspension systems, recovery equipment, and the newly launched recovery winch — is sold through a network of 79 ARB retail stores in Australia and an expanding international wholesale and OEM channel.

ARB shares have endured a difficult twelve months, falling over 44% to trade at AUD 17.53 as of 19 May 2026, making it one of the more significant decliners among ASX-listed consumer-facing industrials. The share price erosion reflects a combination of Earnings disappointments, FX headwinds, and softening consumer sentiment in Australia — all of which have weighed heavily on investor confidence despite the company's well-regarded Long-term Growth credentials.

Broker Perspective: Ord Minnett Stands by a Buy at $31

Despite the steep share price decline, Ord Minnett has maintained a Buy rating on ARB Corporation with a price target of AUD 31.00 — representing a premium of more than 76% to the current Market Price.

1H FY2026 Financial Performance: Challenging but Not Without Positives

ARB's half-year results for the period ended 31 December 2025 painted a picture of a Business navigating cyclical and structural headwinds simultaneously. Sales Revenue fell 1.0% to $358.0 million, while profit before tax declined 18.8% to $57.1 million and after-tax profit dropped 17.2% to $42.2 million. On an underlying basis — stripping out the after-tax gain on property sale and Thule distribution termination costs — profit after tax declined 14.4% to $43.2 million.

The primary drivers of the Margin compression were a significantly stronger Thai baht against the Australian dollar and lower factory overhead recoveries. A substantial proportion of ARB's products are manufactured in Thailand, and the baht's sustained strength through 2025 materially increased the cost of goods relative to the prior corresponding period. Weaker OEM channel sales — down 38.2% as major OEM customers worked through elevated inventory levels accumulated in the prior year — further dented overall profitability.

Cash generation remained a bright spot. Operating Cash Flow rose to $63.9 million from $45.9 million, primarily reflecting inventory reductions. The company closed the period with no Debt and $59.4 million in cash, maintaining the financial flexibility to invest in growth and return Capital to shareholders.

Australian Market: Order Book Resilient Amid Sales Softness

Australian Aftermarket sales declined 1.7%, impacted by lower new vehicle deliveries across ARB's core platforms including the Ford Ranger, Ford Everest, Land Cruiser 70 Series, and Isuzu D-Max. Fitment resource constraints at retail stores compounded the revenue shortfall. Despite this, open orders at period-end were 5% higher than December 2024 — a meaningful forward indicator that underlying customer Demand remains intact.

ARB opened five new flagship-format stores during the period and ended with 79 locations across Australia, four more than a year earlier. The recently launched direct-to-consumer E-commerce platform at arb.com.au, incorporating proprietary vehicle-specific cataloguing software, supports an omni-channel strategy that management believes will drive greater sales conversion across the retail network in the second half.

US Business: The Standout Growth Story

ARB's US operations delivered export sales growth of 26.1% in the first half, emerging as the clear strategic engine of the business. Growth was underpinned by the deepening Toyota US relationship, the strong performance of the US e-commerce platform launched in 2024, and the expanding off-road wholesale channel. Critically, the Off Road Warehouse and 4 Wheel Parts combined network of 48 stores is now generating consistent monthly profits, a significant milestone for a business that was acquired to accelerate ARB's US market penetration.

ARB's commitment to an 8,100 square metre Facility in Norco, California — which will house its US engineering team and serve as the integration hub for 4 Wheel Parts — signals management's conviction in the trajectory of the American business. The store-in-store rollout across the 4WP network following a successful pilot is an important catalyst for incremental revenue capture as ARB Brand Awareness deepens across the US consumer base.

Outlook for 2H FY2026 and Beyond

Management has guided that sales margins in the second half are expected to be broadly in line with 2H FY2025, supported by near-full hedging of Thai baht exposure at rates slightly more favourable than the prior corresponding period. Overhead recoveries are also forecast to be consistent with 2H FY2025. OEM sales, while still pressured, are expected to trend marginally better than 1H FY2025 as destocking normalises.

The upcoming release of the new Toyota HiLux — a historically strong vehicle platform for ARB — is expected to contribute positively in the second half. New product launches including the recovery winch and planned releases across 2026, alongside platform development for the Ford Ranger Super Duty and Kia Tasman, should help sustain accessory attachment rates. Overall, management expects 2H FY2026 performance to improve materially on the first half and trade closer to the prior corresponding period.

Conclusion

ARB Corporation finds itself at an inflection point. The 44% decline in its share price over the past year reflects real earnings pressure from FX headwinds, OEM destocking, and subdued Australian vehicle sales — but the underlying business retains its structural advantages: a debt-free Balance Sheet, market-leading brand, a growing US operation, and a product development pipeline that continues to expand ARB's addressable market. Ord Minnett's Buy rating at $31 reflects a scenario where normalising conditions across the Thai baht, OEM cycle, and Australian vehicle Supply converge to drive earnings recovery. Whether that recovery arrives in FY27 will be the central question for investors monitoring this stock.