Hi MarsC, my analysis was not about, or affected by,...

Hi MarsC, my analysis was not about, or affected by, seasonality. I was referring to the declining trend in sales this year (FY2017) versus the same corresponding period last year (and versus FY 2015). All summarised in the table below.

	Column 1	Column 2	Column 3	Column 4
0		FY2016 vs FY2015 (12 months)	1H FY 2017 v1H FY 2016 (6 months)	Q3 FY2017 v Q3 2016 (3 months)
1	Aust aftermarket	6.2%	5.0%	5.8%
2	Exports	12.6%	12.1%	10.8%
3	OEM	12.2%	-1.5%	-5.7%
4	Total	8.2%	6.2%	6.2%

But importantly, recall what the company said last year about sales performance and sales expectations [eg, the AGM presentation] :

1. "Sales growth [in FY16] was hampered by the unusually large number of new vehicle releases made simultaneously in the first half of the year". Without this impact, YoY sales growth in FY2016 might have been higher than 8.2%, and FY2017 YoY growth would look even more disappointing by comparison, IMHO. I also took this comment to imply some sales catch-up this year. But if this catch-up did indeed occur in FY2017, then underlying growth in FY2017 - excluding the catch up - is a little weaker than the numbers shown above imply.

2. "The 4wd drive market that ARB services is strong in many parts of the world and provides good growth prospects. Export sales growth is a top priority for ARB". But for the key markets of the US and europe they are still reporting only "steady performance" (in their own words per Q3 trading update) - and achieving growth rates marginally behind the growth rates achieved in FY2016 (admittedly there is a small currency impact 3-6%; FY2016 was variously impacted too). Given the relative lack of penetration by ARB of these markets c/w Australia, stronger growth must be possible - indeed they grew export sales by 50% in the three years to 2015/16. I think ARB mgmt would be disappointed with their actual export growth rates in fy2017, but they continue to highlight the "strong growth potential". They are still not yet tapping that potential IMHO. (and yes I recall the previous conversation we had MatsC about the returns on capital in that area)

3. For OEM, "Growth is expected to slow a little over the next 12 months but good opportunities exist going forward from 2017/18". But instead of OEM growth "slowing a little", its shrinking (-1.5% for the half and worse in Q3). Not high margins in that area I know, but nonetheless sales performance here is lower than signalled. Improvement is anticipated - witness the "very strong ... current order book" comment in the Q3 update.

As final food for thought, I set out below the YoY revenue growth rates ARB has achieved over approx last 20 yrs (oldest to mos recent). While the 10yr CAGR they report is ~10% pa, faster growth was achieved earlier in that 10 yr period, in the last few years the growth rate is very single-digits. While I'm a huge ARB fan - and the shares have made me very significant amounts of money over the circa 20+ years I've owned them (I have much to be thankful for and no axe to grind) but with a PE exceeding 20 for the next 2-3 years, then unless revenue growth accelerates, the shares aren't that attractive IMHO. (Ie, I expect ARB to be a portfolio laggard). GLAH

	Column 1
0	18%
1	16%
2	15%
3	16%
4	12%
5	14%
6	13%
7	10%
8	17%
9	19%
10	10%
11	19%
12	11%
13	6%
14	8%
15	2%
16	11%
17	8%
18	6%