ARB’s 2026 half-year results
ARB has just dropped its half-year results for 2026, and just looking at the share price – down 13 per cent by the end of February 24, 2026 – you’d think the wheels had fallen off the 4WD. But as any off-road enthusiast knows, sometimes you have to downshift a gear to get through the mud. In fact, the ARB is up 14 percent today (Feb. 25, 2026).
While the headline figures from their report reflect some “short-term pain,” the underlying story suggests that the “long-term gain” remains on track.
The numbers
Revenue came in at $358 million, largely in line with the January market update. However, underlying profit before tax (PBT) fell 16.3 percent to $58 million compared to the previous year.
The main culprit was margins. Gross margins fell to 56.1 percent (from 58.6 percent). However, management was not blind; they had already noticed the headwinds of a weaker AUD/THB (Thai Baht) exchange rate and the under-recovery of factories. The good news is that this may be the low point. With the Thai Baht now almost fully hedged at better interest rates for the second half, margins should stabilize.
In the US
If there is a crown jewel in this report, it is U.S. export activity. Exports increased across the board by 26.1 percent. More importantly, ORW’s (Off Road Warehouse) turnaround moves from plan to reality.
- Profitability: ORW achieved a PBT profit of $3.5 million.
- Extension: The ‘store-in-store’ strategy is being rolled out, with two pilots validated and six more to follow in May.
- Infrastructure: A new 80,000-square-foot distribution center in Norco, California, will replace the old Seattle location, which should deliver significant freight savings.
Essentially, ARB is moving from a niche Australian exporter to an integrated player in the huge US 4×4 market.
Domestic speed bumps
At home, the Australian aftermarket was ‘soft’, with sales down 1.7 percent. It is not a question of demand; the order book is actually 5 percent higher than last year, and daily inflows are near record levels. The problem is twofold: vehicle supply (Toyota can’t get HiLuxes onto dirt roads fast enough) and fitment restrictions.
To solve the latter, ARB is getting creative with better incentives and recruiting international talent (particularly from the Philippines) to close the gap.
The verdict?
ARB’s share price is down 60 percent from its 2021 high, down 55 percent from its 2024 high, and down 47 percent from last year’s high. Much of the decline from 2021 is due to the loss of ARB’s status as a pandemic ‘darling’ with a price-to-earnings (P/E) ratio of 40 times. As travel reopened and interest rates started to rise, the stock’s rating fell, with investors unwilling to pay a high multiple for the same earnings, especially as growth slowed from ‘extraordinary’ to ‘normal’.
Last year the stock rose back to $41 due to the excitement surrounding the partnership with Toyota USA and the US expansion strategy (Off Road Warehouse (ORW), 4 Wheel Parts (4WP)). However, the latest results show that while the US is growing, the rest of the business is under pressure, with margin compression a major concern. ARB produces heavily in Thailand. The Thai Baht (THB) was strong while the AUD was weak, making production more expensive.
The 13 percent haircut on February 24, 2026 feels like a classic case of punishing a ‘miss’ that was already largely pre-released. ARB has reduced its P/E to around 19x FY27 P/E, which, for a company with a net cash position of $59.4 million and a deepening global partnership with Toyota, doesn’t seem too demanding.
Keep in mind that the ‘Toyota Halo’ is real, with the partnership expanding to Asia with ARB-branded equipment on FJ Cruisers in Japan and HiLuxes in Thailand.
HY26 could be the low point. If margins reach their minimum levels (the Thai baht is hedged) and the US engine is finally firing on all cylinders, a significant business turnaround could take place in the second half of ’26.
Disclaimer:
EThe Montgomery Small Companies Fund owns shares in ARB Corporation. This article was prepared on February 24, 2026 with the information we have today, and our opinions may change. It does not constitute formal advice or professional investment advice. If you wish to trade ARB Corporation, you should seek financial advice.
He is also the author of the best-selling investing guide to the stock market, Value.able – how to value and buy the best stocks for less than they are worth.
Roger regularly appears on television and radio, and in the press, including ABC radio and TV, The Australian and Ausbiz. View upcoming media appearances.
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