How RPM Automotive Is Turning Margin Gains Into Sustainable Growth
RPM Automotive Group reported a mixed FY25 with a slight revenue decline but improved profitability and launched a tyre recycling initiative signaling a strategic shift.
- Reported revenue declined 5.2% to $112.1 million
- Like-for-like revenue increased 1.5% to $116.9 million
- Adjusted EBITDA rose 3.9% to $13.0 million
- Gross profit margin improved from 34.1% to 36.0%
- Launched tyre recycling facility as part of FY26 growth strategy
FY25 Financial Performance Overview
RPM Automotive Group Limited (ASX, RPM) has released its full-year results for FY25, revealing a nuanced performance marked by a modest decline in reported revenue but encouraging gains in profitability metrics. The company’s reported revenue fell by 5.2% to $112.1 million, primarily due to the sale of a non-core business segment. However, like-for-like (LFL) revenue, which excludes such disposals, grew by 1.5% to $116.9 million, underscoring resilient demand across its core automotive aftermarket operations.
Profitability showed positive momentum with adjusted EBITDA increasing 3.9% to $13.0 million and underlying net profit after tax and amortisation (NPATA) rising 3.0% to $4.6 million. Gross profit remained steady at $40.4 million, but importantly, gross margin improved from 34.1% to 36.0%, reflecting a more favourable sales mix and disciplined pricing strategies.
Strategic Shifts and Operational Highlights
CEO Clive Finkelstein highlighted that the company’s stronger EBITDA contributions were driven by its Motorsport, Wheel and Tyre, and Performance & Accessories divisions. The sale of the non-core business, while depressing headline revenue and net profit before tax (which declined 7.6% due to higher finance costs), was a deliberate move to sharpen focus on long-term profitability.
RPM’s FY25 strategy emphasized cost control and operational efficiency, which helped lift EBITDA margins from 10.6% to 11.6%. The company also extinguished its convertible note, maintaining net debt within target ratios at $27.0 million, slightly up from $25.7 million the previous year, and sustaining ample cash flow for working capital and capital expenditure needs.
Innovating with Sustainability, Tyre Recycling Facility
A standout development during the year was the launch of RPM’s tyre recycling facility, a forward integration initiative that leverages its existing wholesale and retail networks. This program addresses a significant environmental challenge by repurposing end-of-life tyres that would otherwise contribute to landfill waste. The company has invested heavily in this initiative, confident it will enhance profitability and operational sustainability in the medium term.
Looking Ahead, FY26 Strategic Priorities
RPM is pivoting from rapid expansion to a more measured approach focused on organic and sustainable growth. The company outlined five strategic pillars for FY26, becoming a leading auto services business with competitive pricing, scaling its national network to capture more fleet business, delivering exceptional customer solutions, maintaining strict cost discipline, and expanding through adjacent growth plays like tyre recycling.
This strategic recalibration aims to extract greater value from existing operations, improve operational cash flow, and ultimately enhance shareholder returns. With a solid financial foundation and a clear roadmap, RPM appears well positioned to navigate the evolving automotive aftermarket landscape.
Bottom Line?
RPM’s FY25 results set the stage for a disciplined growth phase, with sustainability and margin expansion at the core of its next chapter.
Questions in the middle?
- How will the tyre recycling facility impact RPM’s profitability and growth in FY26 and beyond?
- What are the risks associated with the increased finance costs that pressured net profit before tax?
- Can RPM’s shift to organic growth sustain momentum in a competitive automotive aftermarket sector?
