Hi Mars Yes, a poor return on capital, means growth will make us...

Hi Mars

Yes, a poor return on capital, means growth will make us poorer, not richer. But since mgmt have got more capital invested here than us, and have demonstrated they achieve good returns on capital, I'm trusting they will do the right thing in future too.

I did some analysis on US returns versus ARB's overall returns since 2002. I'll spare you the details, but in a nutshell, Aust and Thailand make high margins and high returns on investment. US ratios look dismal by comparison to those two markets, and to the overall group.

ARB's capital investment is greatest in Aust and Thailand - where they have manufacturing plant. As HK1 noted, The US investment is just warehouse and some other assets to enable them to make and service sales - and is much less than the total Thai investment (about half) despite having a much longer history. So long as that US investment enables them to make more sales to use the manufg capacity, then the margins and returns on capital reported in the US probably don't mean much - ARB might just prefer to report the profits in Aust and Thailand.

The slightly more encouraging news was that US sales have grown by a compound 8% p.a. since 2002. This is not quite as good as for the overall group - but is not too shabby - and better than I had realised. Since 2011 US sales have increased by 13% p.a. By contrast Aust revenues have grown by less than 5% p.a. since 2011. Also sales in Europe have grown from $1.3m in 2014 to $10.8m in 2016. That's pretty encouraging progress!

PS. none of my analysis adjusts for forex rate changes.