The Bapcor Ltd (ASX: BAP) share price has jumped 15% after reporting its HY25 result.
Bapcor owns a number of businesses related to vehicles including Autobarn, Autopro, Midas, ABS and Burson,
Bapcor HY25 result
Here are some of the highlights for the six months to 31 December 2024, excluding businesses sold or held for sale:
- Revenue rose 0.3% to $987.8 million
- EBITDA fell 7.2% to $132.5 million
- Underlying net profit declined 15.2% to $45.5 million
- Statutory net profit dropped 13% to $40.8 million
- Dividend per share cut by 16% to $0.08
Bapcor said that trade (including Burson) revenue grew 1.9% and trade EBITDA climbed 12.3%, offset by the weaker retail and specialist segments.
The company said it expects to reach the upper end of its cost savings target in FY25 of between $20 million to $30 million. The business said it’s reducing its small warehouses by around 20% in FY25, while the majority of the head office headcount reduction was completed towards the end of the first quarter of FY25.
The business said it sold its non-core MTQ diesel fuel injection business on 28 November 2024.
The business also said its net debt was reduced by 9.7% to $304.5 million, down from $337.1 million at 30 June 2024. The dividend payout ratio represents 60% of underlying net profit after tax.
Management comments
The Bapcor Executive Chair and CEO, Angus McKay said:
In my first six months we have been resolute in delivering on the actions previously outlined to right-size the cost base, enhance operational efficiencies and set us up to grow. We made significant progress during the half, with the benefits of these initiatives starting to be realised, as evidenced by our core Trade business growing EBITDA by 12.3%, however trading conditions remain challenging impacting our Retail, New Zealand and Specialist Wholesale divisions.
We expect to deliver cost savings towards the top end of our $20-30M target range in FY25 which will be second half weighted. We have been highly disciplined in how we manage working capital and our strong cash conversion has meant we were able to pay down debt, while investing to grow our Trade network and make significant strategic improvements in IT.
There is a lot more to do and we are taking action to further simplify the business and strengthen our core operations while assessing how to optimise our underperforming segments.
Final thoughts on the Bapcor share price
The business revealed that in the second half of FY25 to 14 February 2025, sales were up 0.5%, with trade sales growth of 3.7% offset by weakness in retail and wholesale.
The business is making the right moves to help profitability, but its retail sales may not rebound until the Australian economy improves.
It could be an ongoing recovery opportunity with the RBA interest rate starting to come down, however I don’t have high conviction in that view. The number of cars on Australia’s roads continues to grow, but I’m not sure how bright Bapcor’s future is. There are other ASX growth shares I’d rather buy first.
