The ARB Corporation Ltd (ASX: ARB) share price is down 11% after the company announced that its FY26 first half wasn’t as strong as desired.
ARB sells 4WD car accessories that help vehicles in bushland and outback terrain. It also international operations, which includes the US.
FY26 sales update
In the process of preparing its FY26 half-year result figures for the period to 31 December 2025, the company has seen that its total sales revenue was down 1% year on year to $358 million.
The ASX share reported that sales to the Australian aftermarket channel were down 1.7%, which reflected sales of key models in the FY26 second quarter and ongoing fitting capacity constraints in Australia.
Company sales to the original equipment manufacturer (OEM) channel in Australia declined 38.2% compared to the same period last year because of timing of OEM contracts and model releases. The company had previously warned about this in the AGM in October 2025.
On the positive side of things, sales to the export channel increased 8.8%, with sales into the key US market being up 26.1%.
Profit expectations
The company said it expects to report the underlying profit before tax in the first half of FY26 was $58 million. Profit is a key element for valuing the ARB share price.
That profit figure excludes one-off items, meaning the gain on the sale of a property during the half ($1.3 million before tax) and costs including the goodwill impairment after the termination of the Thule distribution agreement in November 2025 ($2.2 million before tax).
That profit number represents a reduction of 16.3% year on year.
ARB said that there were two key contributors to the decline in profit.
There was a lower gross profit margin, driven by a weaker Australian dollar compared to the Thai baht.
The other aspect was lower factory overhead recoveries as inventory levels materially increased.
The company’s cash level reached $59.4 million with no debt at 31 December 2025 after paying its ordinary dividend and special dividend during the period.
Final thoughts on the ARB share price
The valuation is now significantly (30%) lower than it was near the end of August 2025.
Considering it’s now close to its 52-week low, this could be an opportune time to invest in a high-quality business with strong international growth potential.
It’s one of the ASX growth shares I’d look at as an opportunity in 2026.
