ARB’s FY26 – A look under the hood
ARB Corporation (ASX: ARB) is Australia’s leading designer, manufacturer, and distributor of premium 4×4 vehicle accessories. Known worldwide for its flagship bull bars, suspension systems, roof racks, and camping gear, the company operates an extensive retail, wholesale, and export network serving off-road enthusiasts, commercial fleets, and Original Equipment Manufacturers (OEMs).
*This article was written on 25 August 2026.
Figure 1. ARB share price. 25 August 2026 ($A)
Source: Google Finance
The market for 4×4 accessories intersects consumer discretionary spending, vehicle delivery cycles, and broader macroeconomic conditions.
Recently, the sector in Australia encountered challenges due to delays in registering new major vehicles, such as popular Toyota and Ford models, and foreign-exchange pressures that increased manufacturing input costs. Nonetheless, strong structural advantages persist, fuelled by continued demand for vehicle customisation, expanding international distribution networks, and the growing popularity of off-road leisure pursuits.
Better than feared
ARB’s FY26 financial result came in materially better than market fears, sparked by a strong second-half (2H26) margin recovery. While top-line sales performance remained somewhat subdued across the year, expanding profit margins comfortably offset the top-line softness.
Profit Before Tax (PBT) for 2H26 landed at $60.7 million. This beat management’s prior guidance for a modest improvement over 1H26 ($58.0 million) and tracked close to 2H25 ($63.0 million). Crucially, consensus expected 2H26 PBT of $57.7 million (with some buy-side estimates as low as $55.7 million), translating into a 5.2 per cent beat versus consensus.
Given the weak share price performance leading up to the announcement and elevated short interest, today’s combination of an earnings beat and a constructive outlook drove a sharp relief rally in the stock.
Earnings & operational insights
Noting the company’s major manufacturing presence in Thailand, management said first-half margins were squeezed by a weaker AUD/THB exchange rate. Currency pressures eased during the second half.
On foreign exchange, ARB is hedged on AUD/THB out to approximately 23 through November 2026, consistent with its policy to lock in rates 3–4 months ahead. Because a substantial portion of these hedges were secured earlier in 2H, continuing spot rates around recent highs (up to 23.6) could create an FX tailwind into 2H27.
Looking forward, FY27 gross margins are expected to roughly align with the FY26 full-year average.
Management confirmed during today’s FY26 earnings call that the second-half (2H26) profit margin expansion was driven by two price increases during FY26 and an easing of the AUD/THB exchange rate, not by inventory adjustments or movements.
The company also confirmed the 2H inventory build had no material impact on factory cost absorption or production throughput at its Thai manufacturing facilities.
Price increases & U.S. tariff refund
To protect profitability, ARB implemented two strategic price increases over the fiscal year: an August 2025 increase (circa two per cent, effective October 2025) and a February 2026 increase (3.5-4.0 per cent, effective April 2026).
Additionally, ARB qualified for a U.S. tariff refund in 2H26 relating to duties originally expensed in prior periods. While management has not disclosed the exact figure, they confirmed it represents significantly less than 5 per cent of FY26 Net Profit After Tax (NPAT) – making it immaterial.
U.S. growth strategy & regional performance
Despite cycling high comps from its OEM channel, management remains confident in its U.S. growth runway. After the initial launch ramp-up for ARB’s partnership with Toyota, the Trailhunter program has levelled out to a stable, ongoing sales baseline, while the addition of the RAV4 roof rack to the Toyota sell-through channel will provide incremental revenue throughout FY27.
Operations, capacity, research & development
Fitting capacity across the Australian store network is in a far healthier state than in the past two years, aided by higher fitter retention. ARB is well positioned to clear the backlogs of key vehicles (especially Toyota models) as supply recovers into 1H27.
On capital allocation, management confirmed there has been no discussion of a special dividend (following the FY25 payout). Meanwhile, engineering investment remains disciplined with research and development (R&D) expenses totalling about $20 million for the year (with circa $4 million capitalised), and management has queued up a 10–15 per cent uplift in engineering spend to maintain its innovation lead.
FY27 Outlook
The outlook across ARB’s core divisions points toward steady recovery:
Australian Aftermarket
A strong finish to 2H, with key Toyota vehicle supply expected to rebound in 1H27.
Exports
Trends remain positive, with UK vehicle registrations set to recover, Europe remains resilient, and growth initiatives in China and South Africa taking shape (offsetting localised weakness in the Middle East).
OEM Channel
Sales are positioned for a rebound in FY27 as vehicle production cycles normalise.
With margin stabilisation and vehicle supply clearing, ARB has laid a solid foundation for its next leg of operational growth.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
He is also author of best-selling investment guide-book for the stock market, Value.able – how to value the best stocks and buy them for less than they are worth.
Roger appears regularly on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
