Good morning, ladies and gentlemen. My name is Roger Brown, and I'm the Chairman of ARB Corporation Limited. This morning, I will introduce the presenters of the webcast of the company's 2021, 2022 results. The first presenter will be Damon Page, the CFO and Company Secretary of ARB. Damon has filled these roles for some time and is well known to shareholders and the investment community. Our second presenter is Lachlan McCann, who was appointed CEO of ARB in July 2022. As the investment community knows less about Lachlan, I would like to shed some light on his background at ARB. Lachlan completed a Bachelor of Business in International Trade with a major in the Spanish language.
He joined ARB in 2001 in the export department, where he developed and supported country distributors through Asia, Africa, Europe, New Zealand, and the Middle East. After that grounding, he has provided consistently strong leadership in various roles across ARB's global businesses, including Managing Director of ARB's Thai operations from 2010 to 2014, as General Manager of International and OEM Sales 2014 to 2018, and most recently as Chief Operating Officer, including responsibility for global sales from 2019 to 2022. Well, enough from me. Let us get on with the webcast. I'll pass over to Damon.
Thanks, Roger, and good morning, everybody. Thank you for joining us. This webcast platform allows participants to submit questions at any time via the Q&A box in the bottom right-hand corner of the screen. Once you've finished typing the question, please hit the arrow symbol to submit the question to us. Please note that while you can submit questions at any time, we will only respond to them at the conclusion of the presentation. Please also note that questions may be moderated or if we receive multiple questions on one topic, they may be amalgamated. Now, moving to the financial highlights for last year. Let's go to slide three of the presentation. The chart on the left-hand side of the slide shows that the company recorded sales revenue of AUD 694.5 million during FY 2022.
This represents growth of 11.5% over the financial year ended 30 June 2021, which in turn had grown 33.9% over FY 2020. Growth was achieved in the key Australian aftermarket and export segments. However, sales to original equipment manufacturers were flat, as we flagged to the market in the half year presentation. Sales revenue this year included a full year's contribution from recent acquisitions in New Zealand and the U.K. The supply of new vehicles continues to lag demand around the world, with consumers waiting months and even in excess of a year for delivery of their vehicle on order. Our domestic customer order book continues to hold at elevated levels due to sustained customer demand and slower vehicle availability. Higher inventory levels are still serving us well, particularly in wholesale export markets.
In the middle of the slide, the company achieved net profit after tax of AUD 165.7 million this year, which represents growth of 10.4% over the prior year. This is broadly in line with the growth in sales revenue of 11.5%. Maintaining profit before tax at 23.8% of total revenue in a higher inflationary environment was achieved by successfully implementing regular price increases throughout the year to mitigate higher costs and a strong focus on cost management to ensure expenditures scaled at no more than or even below the growth in sales. While we haven't normalized the results, we note that the prior year included AUD 9.8 million in government wage subsidies compared with no subsidies this financial year ended 30 June 2022.
The chart on the right-hand slide highlights that profit after tax grew at a slightly slower pace than sales revenue and profit before tax due to a higher proportion of taxes being made in higher taxing jurisdictions, lifting the group's effective tax rate by almost 2%. Earnings per share increased 6.7%, which is slightly below the 8.1% growth in profit after tax due to an increased number of shares on issue from the operation of the Dividend Reinvestment Plan and Bonus Share Plan during the year. Let's go to slide four. This particular slide highlights the sales growth achieved in each segment by financial half over the last two years.
While total group sales grew by 11.5% during FY 2022, as highlighted on the previous slide, growth in the first half of 26.5% contrasts with a small decline of 1.1% in the second half compared with the corresponding half last year. The Australian aftermarket continued its solid growth, with sales up 9.2% over all of last year. However, stronger sales growth of 15.6% was achieved in the first half, compared with lower sales growth of 3.3% in the second half. Now, the contrast is a little more profound in the export segment, with sales up 9.2% over all of last year.
Sales—where sales dropped from 39.9% growth in the first half to just 0.4% in the second half compared with the corresponding periods in the prior financial year. Sales to the Australian aftermarket and export markets in the second half were significantly impacted by two key things. Firstly, the emergence of the Omicron variant in January and February 2022, which resulted in abnormally high staff absenteeism. Noting it wasn't only staff that had contracted the virus that were isolating, but staff with householders that had contracted the virus were required to isolate as well. Secondly, by ongoing limited new vehicle supply and availability around the world. Now, sales into export markets were also impacted in the second half by the outbreak of war in Ukraine.
Much of the overall decline in the second half, though, is attributable to a decline in sales to the original equipment manufacturers of 32.1%. This was flagged to the market previously, specifically during the half-year presentation in February, and again later at the Macquarie conference in May. The decline in sales was a result of OEs stocking up for two new model releases during calendar 2021, which, due to slower vehicle availability, has also impacted on sales to OEs during calendar 2022. Let's turn to slide five. The company has declared a final dividend for the financial year ended 30 June 2022 of AUD 0.32. Whilst the dividend of AUD 0.32 is down compared with last year's final dividend of AUD 0.39, total dividends for the year of AUD 0.71 per share are up 4.4%.
The dividend payout ratio remains within the company's policy and is relatively stable at around 48%. Now, the 10-year chart to the left of the slide demonstrates that dividends paid have tracked broadly in line with the growth in revenue and profit over the last 10 years. We go across to slide six, which compares each expenditure category for the financial year ended 30 June 2022 with the prior year and highlights what each category represents as a percentage of sales. Now, broadly, each expense item is largely tracked in line with sales. You'll note, though, that materials and consumables used have improved slightly, reducing from 45% of total revenue to 44%. This improvement is attributable to sales price increases implemented throughout the year to offset inflationary pressures and also the strengthening of the Australian dollar against the Thai baht.
Of note, you'll see that the effective income tax rate has increased from 24.7% to 26.4% due to a higher proportion of profits made in higher taxing jurisdictions. The shift to the higher effective income tax rate results in approximately AUD 2.6 million more taxes paid for the year in comparison to the effective rate from last year. The final slide in respect of the financial highlights is found on slide seven of the pack and includes financial highlights in respect of cash flows. The company generated cash flows from operations of AUD 84.6 million during the financial year ended 30 June 2022.
Now, this was a decrease of AUD 18.6 million compared with the prior year, and was largely driven by an increase in inventories of AUD 50.7 million over the year. While the company stocked up to mitigate against longer supply lead times and to facilitate growth, we have also been impacted by slower new vehicle supply into the market, with products already on hand for customer orders with vehicles yet to be delivered. The company spent the cash generated from operations in two key areas. Firstly, in the blue box, on future investments for future growth, with AUD 58.1 million spent on property, plant and equipment. The majority of this capital spend, being AUD 44.5 million on property, was spent on major projects underway as announced in previous presentations.
For example, the company's fourth factory in Thailand, which is due for completion later this year, the company's corporate head office upgrade in the eastern suburbs of Melbourne, the purchase and redevelopment of the company's site in New Zealand to consolidate the two businesses recently acquired there, and the continued development of the company's retail store network. Secondly, the company paid AUD 50.3 million in dividends this year after a 21% take up of the Dividend Reinvestment and Bonus Share Plans. Overall, the company held cash of AUD 52.7 million at the end of the financial year, a decline of AUD 32.1 million, while the company maintains its financial position with no debt. I'm pleased now to hand the time to Lachlan, our Chief Executive Officer.
Thank you very much, Damon, and good morning, shareholders. It's my pleasure this morning to take you through an operational update for the company. Before I begin, we've just been notified there's a slight delay to the share slide transition as we move through the slides. A small delay as we move between the various slides. Beginning on slide eight, the fortunes of Australian OEMs has been well publicized in the last 12-24 months. Demand for four-wheel drive vehicles, both pickups and SUVs, have been incredibly strong. Supply, on the other hand, remains a challenge as vehicle manufacturers have fought component supply shortages, natural disasters, and COVID-related workforce issues. Of the vehicles that affect ARB's domestic aftermarket business, new vehicle sales were flat to last year.
Going through some of these individually, the king of the road, Toyota's Land Cruiser, had a model change from the 200 Series to the 300 Series in the financial year that was both delayed and restricted in volume. This saw the Land Cruiser sales in the financial year decline by 57%. Similarly, towards the end of the financial year, Ford was transitioning from the old Ranger to the new Ranger, as well as dealing with constrained supply. For the full year, the Ford Ranger sales contracted by 6.5%. Toyota fared well with the Hilux 4x4 up 5%, Prado up 23%, and the 70 Series Land Cruiser model up 22%. The various mid-sized SUVs also perform well with the Ford Everest and Isuzu MU-X having strong years. Moving to slide nine and continuing on with Australian new vehicle sales.
As mentioned, sales of ARB's target vehicles are flat to last year. Despite this, as mentioned by Damon, ARB managed to grow its domestic aftermarket business by 9.2%. The market share of ARB's target vehicles relative to total vehicles sold in Australia moved positively from 49.6% to 50.3%. While new vehicle sales are important to ARB, it is noteworthy that ARB stocks and distributes products for the second-hand vehicle market, going all the way back to models not manufactured since the 60s and 70s. With constrained new vehicle supply, ARB saw healthy demand for accessories from the second-hand market. As we look forward, the domestic OEMs have healthy back orders for four-wheel drive vehicles to the extent that on some models, such as the Land Cruiser 70, Toyota have stopped taking customer orders.
ARB understands that new vehicle supply in the Australian market will improve in the 2023 financial year. Moving on to slide 10 and the ARB store development. ARB store network now comprises of 74 stores nationally. 34 are company-owned and 44 are branded stores which are privately owned. Four stores were converted to flagship stores in 2022, bringing the total flagship store count to 34. Stores added to the flagship program in 2022 financial year were Karratha in Western Australia, Rutherford in New South Wales, Melton and Sale in Victoria. ARB corporate and our independent store owners have a healthy list of flagship store developments for both new, all new stores and remodeled stores, which you can look forward to learning more about in the new financial year.
Now moving to slide 11 and the export business. While the continuous improvement of the Australian domestic business remains a key focus, our drive to grow both brand presence and revenue offshore is fundamental to our current strategy. To that end, ARB's export business grew 17.4% in the reporting period and now represents 38.7% of ARB's total business. ARB experienced growth in all international markets. The most pleasing results came from the Americas, Europe, and New Zealand. While a combination of COVID and geopolitical tensions negatively affected ARB's business in both Russia and China. In response to the conflict in the Ukraine, ARB has ceased sales to Russia, which has historically been an important market for ARB. Moving on to slide 12 and the OEM business.
The year-on-year success of ARB's OEM business is very dependent on the timing of new model launches. As a result of this, the OEM business was flat to the prior year in which the OEM business experienced 73.9% in the FY 2020. As indicated in the graph, there were two major model launches in the last 24 months, each supporting record sales in their respective years. ARB has expanded its OEM sales reach, and we now have a number of new long-term contracts that we expect to begin fulfilling in future years. These contracts are both in the Australian market and overseas. There are no new major model launches forecast in the new financial year, which we expect will impact the OEM business, as explained by Damon.
As the OEMs catch up on vehicle supply to the Australian market, we anticipate increased sales on existing contracts. The Ford U.S. tested and approved ARB Ranger bull bar is in market despite several delays. While sales are relatively modest, Ford and its U.S. dealers are very positive about the product. The development process and key learnings have been very helpful for future opportunities for ARB. On a final note on OEM classification of ARB-branded OEM products such as the jointly developed Ford Ranger bull bar will be included in the aftermarket segment going forward. Moving on to slide 13 and a Ford update. The relationship with Ford Motor Company is strong.
Both companies have been very pleased with the collaborative engineering development work, whereby ARB has supported Ford engineering to ensure specific platforms are designed for accessory integration, and Ford has supported the integration of ARB accessories to its vehicles, ultimately, for an enhanced consumer experience for the vehicle and accessories package. The Ford Ranger has now launched in the Australian market and the Everest launch is imminent. ARB has a full lineup of accessories for both vehicles available at launch. Ford's and ARB's dealer networks have been working closely together to support customer vehicle and accessory demand, whereby the customer purchasing ARB accessories through the Ford dealership is given a five-year warranty on the vehicle and the accessories. This program is known as FLA or Ford Licensed Accessories program.
Ford and ARB will be rolling out the FLA program in a number of key markets outside Australia, including New Zealand, Southeast Asia, Europe and South Africa. The response from consumers and industry experts has been very, very pleasing. In the U.S., Ford continues to develop ARB FLA offering focused on the Bronco and Ranger platforms. Unlike Australia, safety-critical products require much more engineering work from a compliance standpoint. However, general use products such as compressors, jacks, and suspension have been approved through Ford systems. Now on to slide 14 and a U.S. update. Pleasingly, ARB's business and brand awareness continues to strengthen in the U.S. ARB will be launching a third DC in Texas in October 2022. The site is a 4,000 sq m facility near Dallas.
Our research into a third site for the U.S. market was prompted by increased stock holdings from, and our desire to have a maximum two-day shipping lead time to key U.S. states, both in per capita wealth and population of pickup and SUV vehicles. The Texas market represents an exciting opportunity for sales growth for ARB. 4 Wheel Parts, formerly owned by Polaris, is a key customer of ARB's in the U.S. ARB actively pursued the opportunity to acquire 4 Wheel Parts, however, we were effectively excluded from the sale process by Polaris. Through the sale process, our business with 4 Wheel Parts has slowed. Our engagement with the Wheel Pros team who acquired 4 Wheel Parts has been positive, and we're supporting them where possible to learn the 4 Wheel Parts business. The U.S. OEM business has been discussed in prior slides.
However, in addition, we are pleased to announce that we have been in talks with Toyota U.S.A. over a number of years, and we will be partnering with ARB, and Toyota will be partnering with ARB on strategic accessory programs with a key focus on overlanding. I would caution that despite the opportunity this presents to ARB for an Australian accessories business, we're dealing with large corporate America. As we've seen with Ford, the relationship will take time to mature, but the opportunity for both brand exposure in the U.S. and future growth keeps us keenly engaged. Finally to Latin America, which continues to grow. Logistical access to Central America from Mexico down to Panama is challenging from our Florida DC.
Texas will provide much better access to these markets and enhance freight lead times, enabling more sales and marketing activities, which we are looking forward to. Broadening opportunities in the two largest Latin American markets of Brazil and Argentina remains on the to-do list. Currently, prohibitive tax import tax regimes make them difficult to navigate. However, this very much remains on our horizon. Moving on to slide 15 and the key export market focus. A couple of updates on key export markets. The U.K. business has faced short-term to immediate-term headwinds that has affected its performance. Truckman's business is largely reliant on new vehicle sales, which have been particularly constrained in the last 12 months. A number of pickup models in Australia are unavailable in the U.K. and Europe. Therefore, the market relies very heavily on a couple of specific models.
In the reporting period, Toyota South African factory that supplies vehicles to the U.K. was flooded, causing many months of stopped production. Like Australia, the Ford Ranger has been caught up in the model changeover. We are optimistic that vehicle supply and our related business will recover late 2022 to early 2023. Freight costs and labor shortages have also negatively impacted Truckman's business. However, there have been some short-term improvement in freight costs and container availability. ARB's development of our core product sales in the U.K. market continues to progress very pleasingly. The brand has a long history in the U.K., and we're optimistic to grow in the U.K. with ARB products moving forward. Onto New Zealand.
As the manufacturer of the ARB canopy shell, Proform remains a key contributor to the company's success for the Classic and Ascent canopies in Australia and New Zealand. Freight disruptions and escalating costs into New Zealand hampered the New Zealand business and Proform's competitiveness with global manufacturers of similar products. The New Zealand labor market remains extremely tight, and both the availability and cost of labor has impacted the business and remains a focus today. New Zealand has not escaped the problem of new vehicle supply, which has been well discussed in prior slides. Despite the headwinds in vehicle availability and freight, sales of ARB products to the domestic New Zealand business continues to grow steadily.
As we continue to develop our sales channels and marketing presence, we remain confident of ongoing growth for ARB products in New Zealand. Onto slide 16 and our engineering and new products presentation. Product innovation remains a core pillar for ARB's continued competitive advantage. With over 100 design and production engineers in Australia, Thailand, the U.S., New Zealand, and the U.K., ARB caters to consumer demand across the world. As a part of the head office redevelopment, the engineering team will have a new 1,000 sq m center of excellence to better house the team, their workshop, and the various testing and development equipment they require. As ARB expands our range of products developed for each vehicle, so too does the work involved in each new model release.
The engineering team have been extremely busy on a full lineup of accessories for the Toyota Land Cruiser 300 Series, Ford Ranger, and Ford Everest. There are several multi-year development projects set to come to market in the new financial year. These four-plus long-term development projects encompass both additions to the existing lineup, as well as a number of all-new product offerings for ARB which we're extremely excited about. Please keep your eyes keenly peeled for these releases in the coming months. Moving to slide 17 and a forward focus. This summary slide contains key points made in today's presentation as the company looks forward. There are many strategic opportunities for ARB on the horizon, which we will work through cautiously in an uncertain economic environment. Onto slide 18 and a small update on the Thai factory, which is currently under construction.
This is our 36,000 sq m factory based in Rayong. The work's 83% complete, and the site's looking great. We're on track to be taking over the site in December 2022 and begin commissioning equipment shortly thereafter. The final slide 19, is the outlook. The company's growth in financial year 2022 has been achieved in a very challenging and uncertain global environment, particularly in the second half of the financial year. These conditions have persisted into the first half of the current financial year, and it is not possible to provide further financial or operational guidance in the short term with any level of confidence due to the continuing and significant global uncertainties.
Nonetheless, the board remains positive and expects the company should benefit towards the end of calendar year 2022 from recent new vehicle models, improved new vehicle supply, and a strong domestic customer order book sitting well above historical levels. A number of all-new products due for imminent release, healthy demand for the company's products from around the world, and the prospect of increasing supply of new cars to the market. The board remains focused on the long-term growth of the company as it develops and pursues a number of exciting opportunities, some of which have already been announced to market. These include further growth in export markets and overseas opportunities, new products, improved distribution, and increased manufacturing capacity.
ARB is well-positioned to achieve long-term success with strong brands around the world, loyal customers, a capable senior management and staff, and a strong balance sheet and growth strategies in place. Well, thank you very much for taking the time to listen to our presentation. We'd now like to open the meeting for some questions.
Yeah. Thanks, Lachlan. Our apologies to some of the attendees on the presentation. We understand that for some, the audio dropped out several times for a number of seconds, so we apologize for that. We believe it's now been corrected and we don't anticipate any issues during the Q&A section of the presentation. That being said, a number of questions have come through through the webcast platform.
I'm just going to read through these, Lachlan, and we'll determine between us who's going to respond to them. The first one is looking for some extra color on the sales decline in export sales or sales to the rest of the world in the second half of 2022 versus the first half. What we saw there is we saw that export sales, and this is really coming from slide 4 in the presentation pack, export sales to the rest of the world in the first half of the financial year were AUD 138 million, and in the second half were AUD 131 million.
Really, the decline in sales over that period, if I can, Lachlan, was really. We were really impacted by the emergence of the Omicron variant of COVID-19 during January and February particularly. We, like a lot of companies out there, had a lot of staff absenteeism, which really impacted on our ability to service customers, but it also impacted on our customers' ability to get to market themselves.
The decline of AUD 7 million between the first and second halves we attribute really to that, increased Omicron variant, and also the outbreak of war in Ukraine, which has had significant implications around all of the globe and all industries. That has also impacted on us. Lachlan, do you have anything you wanna add there, or you're happy to move on?
No, happy to move to the next question.
Okay. The question is, can you elaborate on what you mean by support for 4 Wheel Parts under new ownership? That will really be coming from the slide that you covered off-
Yep
in the U.S.
Yeah. Yeah, I mean, ARB is a retailer, and Wheel Pros are not. ARB's been dealing with 4 Wheel Parts for many, many tens of years. They've got their business to run, but we certainly understand how we've been successful within 4 Wheel Parts, and obviously exactly constrained to ARB product success within that business. We're working as hard as we can to provide the history of our relationship with 4 Wheel Parts to the Wheel Pros executive team to help them understand how to move forward with a successful ARB strategy for their acquisition.
Okay. Lachlan, can you please elaborate on the new commercial agreement with Toyota in North America?
At this stage, no. I think we've said as much of that as we need to say. We'll, once further details can be made public, we will make those public.
All right. Raw materials and consumables as a percentage of sales were running around 45% for many years. That dropped to 42% in the first half of 2022, and then up close to 46% in the second half. Can you please explain the variance, second half versus first half? Really, well, there's a number of factors of course feeding through raw materials and consumables. We have, we are of course in a high inflationary environment at the moment. Like other businesses we're incurring a number of cost increases across the business, which we're seeking to mitigate through increases in sales prices to market in an effort to maintain our gross profits and ultimately our net profit.
Some of the factors that are influencing us are that in the first half we certainly had a more favorable movement in the Thai baht in the first half. There was some additional FX gains compared with the prior year that we achieved in the first half versus second half. The other factor that's really impacted on us there is that we increased our inventory significantly during the first half of this financial year, and much of that was achieved through higher volumes going through our factories, which of course recovered higher overheads. The difference in the Thai baht and the higher overhead recoveries in the first half explains the difference in the percentage of consumables to sales first half versus second half. Okay.
If we now move to another question. Overseas tax paid reduced from 9.5% last year to roughly AUD 6 million this year. What explains this disparity? We have obviously operations around the world, and which means that we have to comply with international transfer pricing tax obligations, not only here in Australia according to the ATO, but according to international tax rules as well. What's occurred in the current financial year is that we've generated higher profits in higher taxing jurisdictions, primarily in Australia, and that has changed our effective income tax rate. Okay. Looking through at the next question. Can you please discuss the contribution of new Ford deals in FY 2022 and the expectations for FY 2023?
As it relates to the domestic market, it's very much too early to say. Certainly the early uptake of the FLA program on the Ranger has been pleasing. Important to note, not information from Ford, but public information, they've taken either deposited orders or something similar of 20,000 Ford Everests. Now, the Prado sales the last financial year sold 21,000 vehicles. We do know that Ford was targeting the Prado with that vehicle, and we see the new Everest as a great opportunity for the business. We're confident on that. As it relates to the volumes going forward, it's very much too early to tell.
I think there's been, as it relates to the North American market, we are starting to see some orders coming through for a number of products which I mentioned in my presentation. They are not necessarily material to the group at this stage. We are starting to see products flow through, which is really pleasing.
In relation to the Ford deals, specifically in the U.S. Are they sales to Ford being booked or recognized in the export segment or in the OEM segment?
It's a good question and it's as much as that as what type of product it is. I know that's a bit of a strange answer. What we've decided as a business, if it's got an ARB badge on it, we're calling it an aftermarket product. Now, there's various permutations of engineering development that go into each product, which I won't explain, and the lines between what an ARB branded aftermarket product and what ends up being morphed into an OEM product are becoming a little bit more complicated. As mentioned in the presentation, if it's going out with an ARB badge on it, we'll be calling it an aftermarket sale.
Okay. In response to the higher taxes paid, or the higher effective tax rate in 2022 versus 2021. The question's asked whether tax concessions have expired in Thailand. The answer there is no. Thailand does offer some tax concessions to companies looking to invest in Thailand and operate out of there. Our profile in Thailand is unchanged from previous years. I can confirm in relation to another question that the higher effective tax rate will persist into 2023 and likely 2024 as well. Can you speak to timing factors in contrast to Tacoma Tundra opportunity to the Ranger Bronco and/or Jeep opportunity?
No. Not at this stage. There's certainly, as mentioned in the presentation, a range of products that are more easily taken up by the OEMs, which are non-safety critical, which I mentioned in the presentation. Any product that doesn't touch the OEM safety systems is more easily integrated and taken up through that network. That has happened at Ford. We expect those type of products will be looked at early by Toyota. As we relate to more complex products being integrated to the vehicle, they are longer term projects.
Thanks, Lachlan. A question here in relation to expectation on key drivers for operating margins in FY 2023. Look, we expect the inflationary pressure's going to continue for a number of months yet, probably for much of 2023. As mentioned previously in the, or earlier in the presentation, we are looking to mitigate the inflationary cost pressures by passing them on to the market. We typically take small incremental price increases and provided the market will continue to sustain those price increases, we anticipate mitigating those cost pressures. That being said, we're also looking very carefully at our expenditure base, at our cost infrastructure base to ensure that we work hard to maintain our margins. Freight costs look as though they're starting to moderate a little.
We're not quite certain whether they'll return. Well, at this stage nobody knows whether they'll return to levels that they were at previously. Freight costs continues to place pressure on margins as well. Steel costs also look as though they may come down in the medium term, albeit we're only seeing a very small decline there. Overall, we are striving to maintain our profit margin through price increases and cost rationalization. Can you provide more detail on the overall strategy in the U.S. market, including an update on Ford Bronco?
Look, I'd broadly say that the U.S. strategy, we're seeing the brand exposure of ARB continue to strengthen and certainly, you know, if we put the sales opportunity aside, to have a company like Ford Motor Company putting the ARB brand in front of its customers is extremely pleasing. As I said, it's going to take time to mature. We're not after and we're not expecting an immediate reaction. We have started transacting with Ford, which is very pleasing. We're extremely excited about the recognition that an association with Ford, like Toyota, gives ARB in North America.
Thanks, Lachlan. Can you talk about early observations around the penetration rates, the basket size, and the market share for ARB on Ford Bronco sales in the U.S.?
There's some misunderstanding. I see that's from Andrew. Maybe we'll take that question offline and try to give a better explanation. It's quite a complicated question with regards to which accessories we're actually selling on the Ford Bronco. We'll take that up separately with Andrew.
Can you tell us what data insights you're basing your assumptions on?
Yeah, I understand the question. What, how do we know that the vehicle sales are going to recover? Look, we supply for us to be in a good position in the Australian domestic market, to be able to have stock for the Ford Ranger and Everest, and then in line with that, for us to supply a number of other OEMs in Australia with products that we provide on a genuine basis, they have to give us a forecast and lead time. Within that we can reasonably construct a bit of a vision as to where the supply of new vehicles is going to go in the next 12 months.
Toyota Land Cruiser sales and Toyota Hilux sales have started to increase significantly in recent months. Has ARB seen a benefit from this in the first half of 2023?
Look, offset by the real lull in Land Cruiser 200 Series. I mean, we saw a massive shift in a number of months where 200 Series fell behind. On a net basis, I wouldn't say we'd certainly still be behind where we'd like to be, but it is very pleasing to see the Land Cruiser out there on the market and vehicle accessories beginning to be attached to it. As it relates to Hilux, it's been great to see more vehicles coming through. We do have a full range of products for the Hilux and, of course, as more Hilux are put out in the market, we see an improvement.
You know, we have to remember that it's been off the back of a significant decline in the vehicles being available in the market.
An observation's made that Transamerican Auto Parts was recently sold for $50 million. Did ARB look at the business?
As explained in the presentation, yeah, we were very interested in the opportunity. However, we were not permitted to bid in the process, so unfortunately we weren't given a look at that, and we move on.
What is ARB's U.S. retail strategy going forward?
Look, right now we're really focusing on our wholesale business. That's where our direction is. We continue to keep pushing on our brand development in a huge market. Right now that's where our focus and our energies are going. Needless to say, developing relationships in Ford and Toyota are very time-consuming, so that's where we're spending quite a bit of our time at the moment. Not neglecting, obviously, our other key aftermarket customers and making sure that we're putting our best foot forward with the new executive team at Wheel Pros.
Okay. A question's come in around the order book, how it compares to pre-COVID times and to the peak during COVID. Perhaps I can take that one. You know, we've advised the market previously that our order book increased to about 4x what it typically sat at pre-COVID times. It peaked there and sat there for a couple of months and really came back to about 3x our normal order book size. It remains at about 3x the pre-COVID levels still at this stage. That being said, the order book really relates to our domestic customers.
You know, being a wholesaler overseas in the international markets, and with plenty of inventory on hand now, we've been able to satisfy the export markets, and we're really maintaining, or keeping up with the orders as they come through. We're still sitting at about 3x our pre-COVID order book. Have higher gasoline prices and interest rates impacted the order book? I think a simple no would be the answer at this stage.
Fuel long range fuel tanks sell fantastically well when petrol prices are high or diesel prices are high. We have seen an uplift in that product sales, but probably not necessarily material.
Some duplication of question around delivery of new vehicles and availability into the market. Given supply challenges that will impact first half 2023, do you think FY 2023 profit growth is achievable? Look, we haven't ever put any projections out to market and we'll continue with that practice. We won't comment on FY 2023 projections at this stage.
Hey, Damon, can I take up the question from Frank Galanti on the Toyota relationship? I just take the note to say that it seems odd that we're making the presentation and talking about this. We do expect Toyota is going to come out with an announcement in the next short period of time. We do often get questions about whether ARB has engaged with other OEMs in North America. We would like to respect our shareholders and advise them that this has happened. We'll be waiting until those further announcements from Toyota come out to be able to speak more on the topic.
Okay. Fleet vehicle sales are lagging. Total vehicle sales. Can you please explain how that impacts the business outlook in terms of revenue outlook and margin mix?
Yeah. Not sure I understand that question.
Yeah. Well, I think it's fair to say that we're certainly seeing strong interest and demand out of our fleet-
Fleet Department
Fleet Department.
Certainly, what we do understand is happening that most fleets with the vehicle availability shortage are having to place their orders further out with the OEMs. Now, whether they engage with us around their accessory requirements at the time of placing those orders or not, but we do understand most companies and government departments running major fleets are being pushed by the OEMs to forecast their vehicle demand earlier.
What are your thoughts on the vehicle emission standard changes being talked about by the government? Could this impact ARB? I think this question is closely linked to an often asked question around the impact of electric vehicles or the introduction of electric vehicles. Really, you know, from ARB's perspective, the vehicle is a platform for our accessories, and how the vehicle's driven isn't necessarily at this stage we don't believe of great consequence. We're not at this stage seeing a significant obstacle there in terms of what these vehicle emission standard changes might have on ARB. Okay, just a handful more. Is the Thai factory experiencing similar energy cost pressures like in Australia? The answer to that is yes.
What is the position on your franking credits? Is there a prospect of a special dividend bearing in mind the cash position and franking credits? The last special dividend paid was AUD 1, and that was back in, I think towards the end of calendar 2014. Tax laws have changed around that particular opportunity, and at this stage the company doesn't have any plans for a special dividend to be paid. Does ARB have any more major capital expenditure in additional factories, distribution centers? We've announced the major projects that we're currently working on, being the fourth factory in Thailand, the corporate head office here in Melbourne, and a significant development going on in New Zealand to consolidate our two newly acquired businesses in New Zealand.
We continue to roll out the new flagship store program across our retail network, and we're also looking to increase the number of stores that we have in the network. The program will continue with the major projects already announced and spoken to.
I'll take the next one. Do you intend to shift more manufacturing from Australia to the new Thailand factory? Should we expect this to benefit overall gross margins in the second half? It's a really interesting question, and we're really comfortable with the balance of manufacturing between Thailand and Australia. We have managed to grow both factories and the output from both factories. Labor in the Australian factory is a little bit more constrained than Thailand, but we have, we've invested in some more technology. In fact, the Land Cruiser 300 Series bull bar at the moment is being exclusively manufactured in the Australian factory, which is great. Look, at the moment, the answer to that question is that we're very comfortable with the balance between the two factories.
With the investment in RA4, our fourth manufacturing location in Thailand, we will be expanding into that site, as we take it over in 2023.
Can you please call out the impact of price on your year-on-year sales growth? I don't know that that's necessarily that relevant. The price increases have really been implemented to offset the inflationary costs increases that we're seeing. To quantify that in isolation I don't think is particularly helpful. Okay.
Last question.
Can you elaborate on the Rivian relationship?
Not really. We're supplying a product to them at the moment, which has been a good relationship. We really appreciate their vehicle, and it's giving us some interesting insight into the development of electric vehicles, particularly in the pickup space. There's probably not too much more to talk about than that.
Okay. Well, we're going to conclude the question and answer time at this stage, and we extend our appreciation and thank those who have participated on the call, and for your continued interest in ARB. Thank you for your time, and we wish you a good day.
Thank you very much.