Eurolux, the Cape Town-based lightings business, continues to be the bright spot for JSE-listed electrical group ARB Holdings.
In early 2012 ARB paid R81m for a 60% stake in Eurolux with its executive management team retaining a 40% interest.
ARB, at this point, might feel that was very worthwhile R81m spent because Eurloux is churning strong profit growth while profits in the core electrical division are dimming somewhat.
Eurolux is one of the biggest importers and distributors of incandescent, energy saving, LED and fluorescent lamps as well as a broad range of light fittings.
The companyt does not sell directly to the public but focuses on selling and distributing its products to specialised lighting shops, independent electrical wholesalers and major retail chain stores in South and southern Africa.
ARB’s interim results to end December showed the Lighting Division’s revenue up 23% to R213,5m and operating profits up 16% to R23,4m.
Recently appointed ARB CEO Billy Neasham said the Lighting Division again produced very pleasing results. He said the (growth) momentum was created by the introduction of new product categories and key customer gains in prior periods.
Neasham said that overhead costs in the Lighting Division rose 20% - causing the operating margin to drop off to 10.9% (from 11,6% in the corresponding period last year.)
But Neasham contended that even though market conditions were expected to remain challenging for the foreseeable future, the Lighting Division was well-placed to carry its positive momentum into the second half of the financial year.
He said the Lighting Division was still seeing strong growth across all key customers and market segments.
In the next six months Eurolux could score from DIY retailer Cashbuild rolling out lighting products. The business has also stocked up in preparation for the AgriNet rollout, and intends expanding its product range into its existing customer base
It seems ARB is also willing to test Eurolux’s product range in selected African markets - which could offer new growth opportunities in the medium term.