Bapcor Limited (ASX: BAP), a leading automotive parts and service provider in the Asia-Pacific region, has released its financial results for the half-year ending 31 December 2024. The Company reported a slight revenue increase but faced a decline in net profit as it focused on cost reduction and business simplification.
Figure 1: Bapcor Reports H125 Results with Cost Reduction Focus
Financial Performance Overview
Bapcor recorded a pro-forma group revenue of $987.8 million, marking a 0.3% rise compared to the previous corresponding period. However, net profit after tax (NPAT) dropped by 15.2% to $45.5 million. Statutory NPAT declined by 13.0% to $40.8 million.
Key financial highlights:
- Pro-forma EBITDA of $132.5 million, down 7.2% year-on-year
- Trade revenue increased by 1.9%, with EBITDA up 12.3%
- Specialist Wholesale and Retail segments underperformed
- Cost savings expected to reach the upper end of the $20–$30 million target for FY25
- Net debt reduced by 9.7% to $304.5 million
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Bapcor’s Executive Chair and CEO, Angus McKay, highlighted The Company’s progress in improving operational efficiencies while acknowledging ongoing challenges.
“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,” McKay stated.
Figure 2: Bapcor’s Financial Performance in 1H25
Trade Segment Performance
The Trade division continued its strong performance, generating $393.7 million in revenue, up 1.9% from the prior period. EBITDA for this segment increased by 12.3% to $70.2 million. The Company expanded its Trade network, opening six new Burson stores, with six more openings planned in the second half.
Bapcor has also focused on improving its Trade supply chain, with IT upgrades aimed at enhancing efficiency. The Company has invested in digital platforms to streamline order management, helping workshops and mechanics access parts more effectively.
Retail and Specialist Wholesale Struggles
Retail revenue declined by 1.1% to $201.7 million. Lower discretionary spending affected sales, particularly in sound systems, roof racks, and bull bars. The Retail division’s EBITDA fell by 26.1% due to declining margins and higher operating costs.
Specialist Wholesale revenue increased slightly by 0.8% to $366.8 million, but EBITDA fell by 6.2%. The Company attributed the decline to weaker wholesale markets and increased competition.
Bapcor is actively reviewing its underperforming segments to identify opportunities for efficiency improvements. The Company aims to optimise inventory management and refine pricing strategies to enhance margins.
Cost Reduction Initiatives
Bapcor accelerated cost-cutting measures to improve profitability. The Company:
- Reduced head office headcount
- Consolidated operations in the Specialist Wholesale segment
- Progressed distribution centre rationalisation to cut small warehouse numbers by 20%
- Completed the sale of the non-core MTQ diesel fuel injection business
McKay confirmed that savings from these initiatives would be weighted toward the second half of FY25.
Cash Flow and Debt Reduction
Bapcor’s cash conversion improved significantly to 108.5%, up from 62.4% in the prior period. Operating cash flows increased to $143.7 million. The Company reduced net debt by 9.7% to $304.5 million, with a leverage ratio of 1.65x.
The board declared an interim dividend of 8.0 cents per share, representing a payout ratio of 60% of pro-forma NPAT.
Bapcor’s disciplined capital management has allowed it to maintain financial stability while investing in key growth areas. The Company continues to assess its capital allocation strategy to ensure long-term sustainability.
Outlook and Strategic Update
Bapcor reported a 0.5% revenue increase in early 2H25, driven by a 3.7% rise in Trade sales. However, the Retail and Wholesale divisions continue to face pressure.
The Company remains focused on further streamlining operations and maximising efficiencies. Investments in IT infrastructure, network expansion, and inventory management are expected to drive long-term growth. The ongoing review of Retail and Wholesale operations will provide insights into potential strategic shifts.
“We have clear focus areas for the second half as we continue to simplify the business and allocate our resources thoughtfully,” McKay said.
Share Price Activity
Bapcor’s share price surged following the announcement, closing at $5.05, reflecting a 12.47% increase. The stock traded between $4.84 and $5.28 during the day, with a high trading volume of 3,470,884 shares, significantly above the four-week average of 425,292 shares.
- Market Capitalisation: $1.71 billion
- Previous Close: $4.49
- Opening Price: $4.87
- VWAP (Volume Weighted Average Price): $5.15
- Day’s Turnover: $17.89 million
Bapcor’s stock has performed well in recent weeks, gaining 7.22% over the past week and 5.65% over the past month. Year-to-date, the stock is up 6.99%, reflecting investor confidence in The Company’s cost-cutting initiatives and strategic direction.
