Ann: Half Yearly Report and Accounts , page-3

VS, Yes still holding ARP, my second biggest holding and a company I have invested in for over 10 years and know to be credible and well run. I've been waiting on the result to make a few comments.

RESULT SUMMARY
* Shutdown of local car manufacturing to have no impact on ARP.
* The directors guided for NPAT to fall up to 10%, and as per usual they were overly cautious and NPAT fell 3.6%.
* Sales to original Equipment Manufacturers (OEM's) continued their slide, driven by mining slowdown.
* Proposed FBT changes affected sentiment and had a slight impact on sales.
* ARP continues to keep a tight reign on costs.
* Dividend up from 12.5c to 13c. EPS fell 1c to 27.8c.
* Cashflow was a little weaker than expected, but ok.

RISKS - IMO
* Heightened political risks in Thailand where ARP have their Rayong plant.
* Sales to OEM's is competitive and low margin. The Kilsyth plant in Victoria supplies OEM's and is not running at full capacity. There is a chance ARP may close this plant in the future and only manufacture in Thailand.
* A strong $A impacts gross margins in Australia (probably moreso for ARP's competitors though).
* I believe ARP underestimated the slowdown in the mining industry and the effect on sales is continuing to be felt.

POSITIVES - IMO
* The slowdown in sales to OEM's and to the Australian aftermarket has caused management to refocus their attention on export sales ( new warehouses in Czech Republic and Florida).
* Export sales to be boosted by the lower $A.
* 2 new independent ARP stores to be established in 2H 2014.
* ARP continue to invest heavily in R & D, to keep abreast of imitations from the competition (a constant threat).
* The expanded facility in Rayong Thailand gives ARP the opportunity to increase production when needed.
* Being a manufacturer and retailer means ARP has the flexibility to assess and respond quickly to consumer demand.
* Honest, proactive, shareholder friendly and competent managers - a rarity these days among the ASX300!

Can't see a compelling reason to sell!