Bapcor Faces Execution Risks Despite Strong NPAT Jump and Strategic Reset
Bapcor Limited reported a 117% jump in statutory net profit after tax for FY25, driven by lower significant items despite a slight revenue decline. The company’s strategic reset, including store consolidations and IT upgrades, sets the stage for renewed growth.
- Statutory NPAT up 117% to $28.1 million driven by reduced significant items
- Pro-forma revenue down 1.5% to $1.94 billion; pro-forma NPAT down 8.4%
- Trade segment revenue and EBITDA grew despite late-year softness
- Specialist Wholesale revenue declined but EBITDA improved post-restructuring
- $27.5 million cost savings achieved; $170 million debt refinanced with strong liquidity
FY25 Financial Highlights
Bapcor Limited, Asia Pacific’s leading vehicle parts and services provider, unveiled its FY25 audited results showing a remarkable 117% increase in statutory net profit after tax (NPAT) to $28.1 million. This surge was primarily due to a reduction in significant one-off items compared to the prior year, which had been weighed down by large non-cash charges.
However, on a pro-forma basis that strips out these significant items, the company’s revenue slipped 1.5% to $1.94 billion, and pro-forma NPAT declined 8.4% to $80.4 million. Earnings before interest, tax, depreciation and amortisation (EBITDA) also fell 4.1% to $246.7 million, reflecting ongoing operational challenges and market conditions.
Segment Performance and Operational Reset
The Trade segment demonstrated resilience, posting a 1.3% revenue increase and a 5.4% rise in EBITDA despite softer trading in May and June. This segment’s growth underscores its role as a core driver of Bapcor’s business.
Conversely, the Specialist Wholesale segment experienced a 3.2% revenue decline due to disruption from consolidation and restructuring efforts. Yet, EBITDA improved by 5.2%, indicating early benefits from streamlining operations and integrating key business units such as CVG and JAS.
Retail and New Zealand segments continued to face a challenging environment, impacted by economic headwinds and competitive pressures.
Strategic Initiatives and Cost Management
FY25 marked a strategic reset for Bapcor, with a focus on simplifying operations and reducing costs. The company exited or relocated 70 sites, consolidated 23 smaller warehouses, and opened 21 new branches and three state-based distribution centres. These moves, while disruptive, are designed to create a more customer-centric and efficient business model.
Significant investments were made in upgrading IT infrastructure, including the rollout of fibre-to-store networks and expanded data reporting platforms. These technology enhancements aim to support future growth and operational agility.
Bapcor achieved $27.5 million in cost savings, hitting the upper end of its guidance range, and returned to positive free cash flow generation, improving cash conversion to 81.8% from 76.9% the previous year.
Balance Sheet and Dividend
The company refinanced $170 million of debt facilities, increasing available liquidity to over $340 million at year-end. Net bank debt rose modestly to $364.8 million, with leverage increasing to 2.13 times EBITDA.
Reflecting confidence in its strategy and financial position, Bapcor declared a final fully franked dividend of 5.5 cents per share, bringing total FY25 dividends to 13.5 cents per share, representing a 57% payout ratio of pro-forma NPAT.
Looking Ahead
Executive Chair and CEO Angus McKay emphasised that FY25 was foundational for future growth, with FY26 expected to see NPAT weighted towards the second half as operational improvements take hold. The refreshed leadership team and strategic focus on technology and customer experience aim to return Bapcor to sustainable profitability and growth.
Bottom Line?
Bapcor’s FY25 results reflect a company in transition, cost savings and restructuring pave the way, but execution risks remain as the market awaits clearer signs of sustained growth.
Questions in the middle?
- How quickly will the benefits of restructuring and IT investments translate into consistent earnings growth?
- What impact will ongoing economic challenges have on the Retail and New Zealand segments in FY26?
- Will Bapcor maintain its dividend payout ratio amid potential market volatility and investment needs?
