ARB Holdings braces for economic weakness in SA

Electrical wholesaler and lighting group ARB Holdings has warned it may take two or three years for South Africa to recover from Covid-19, with profits in its year to end-June falling more than a third as the pandemic disrupted trading.

The group lost out on about six full weeks of trading in 2020, when profit fell 35.7% to R93.3m.

The group saw only 10% of budgeted turnover in April, when it was only able to supply emergency spares for essential services.

ARB’s business includes lighting business Eurolux, which is under further pressure from changes in technology, with the newer LED products being more durable and less expensive.

The lack of minimum prescribed technical specifications has resulted in an unregulated market, which has allowed lower quality lamps to compete in the consumer market where price is the major purchasing consideration, said CEO Billy Neasham.

The group provides electrical cabling, and has been hit in recent years by a drop off in infrastructure spending by Eskom and municipalities.

The Covid-19 pandemic has worsened the pre-existing weakness in the Eskom, building and construction sectors where business and consumer confidence was already at historic low levels, the group said.

“It appears unlikely that even the turgid pre-pandemic levels of confidence, economic growth in our business sector and normality in markets and many aspects of daily life will return before the end of 2020,” the group said.

Neasham said despite constrained trading conditions, the group had significant financial resources, as well as a large geographical footprint and distribution capacity, and management would look to lead the group out of SA’s recession profitably.