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Bapcor (ASX:BAP) share price races higher on HY24 update

The Bapcor Ltd (ASX: BAP) share price has raced more than 4% after a FY24 half-year update that investors enjoyed.

Bapcor is the parent company of a number of auto businesses including Burson, Autobarn, Autopro, Midas, ABS, Shock Shop and Battery Town. It also has a number of specialist wholesale businesses, including ones for heavy commercial vehicles and light commercial vehicles.

HY24 update

The company said its revenue in the first half is reported to be $1.02 billion, which is growth of 2%. The trade, wholesale and NZ segment saw 3% growth to $862 million, while retail suffered a 3% decline to $214 million.

Bapcor also said its underlying EBITDA (EBITDA explained) for HY24 is projected to be between $142 million to $144 million, which would represent a fall of between 1% to 3%.

Retail underlying EBITDA is expected to fall between 11% to 14% to $30 million to $31 million. The trade, wholesale and NZ underlying EBITDA is expected to reach $128 million to $129 million, up between 4% to 5%.

The pro-forma/underlying net profit after tax (NPAT) is projected to be between $53 million to $54 million, which would represent a fall of between 13% to 15%. Profit is a key focus for investors when looking the Bapcor share price.

What happened?

Bapcor explained the weak retail performance was due to a “decline in consumer confidence which reduced discretionary spending as well as lower fitment and installation volumes in some categories such as bull bars and roof racks.”

Finance costs increased by $7 million compared to the prior year, largely because of higher interest rates.

Bapcor said it continued to work on its ‘better than before’ transformation program to deliver longer-term growth. It’s aiming to help underlying net profit in the FY24 second half by between $7 million to $10 million, with this being “on track”.

Management took a number actions in HY24 to address lower-than-expected sales, and cost inflation, which will deliver “further savings” in the FY24 second half. Bapcor said it’s going to implement additional cost-saving initiatives in the FY24 second half. The second quarter improvements are expected to lead to approximately $2 million of annualised benefits.

Final thoughts on the Bapcor share price

Bapcor is positive on the long-term outlook of the auto aftermarket sector, particularly with growth with its trade and wholesale businesses.

I think the company’s defensive attributes are coming through with its wholesale division. The business has growth prospects with its various divisions, particularly when consumer spending recovers.

I’m not sure how the steady shift to electric cars is going to go for Bapcor, but the business seems attractive to me after its 20%-ish fall from October. It has an electrical segment which seems has an attractive future.

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