The Bapcor Ltd (ASX: BAP) share price is catching the eye with a strong gain on Wednesday.
In morning trade, the ASX 200 share is up 15% to $5.16.
Investors have been buying the $1.7 billion auto parts retailer's shares following the release of its half year results.
ASX 200 share jumps on results day
- Pro forma revenue up 0.3% to $987.8 million
- Pro forma EBITDA down 7.2% to $132.5 million
- Pro forma net profit after tax down 15.2% to $45.5 million
- Fully franked interim dividend down 15.8% to 8 cents per share
What happened during the half?
For the six months ended 31 December, Bapcor reported a modest 0.3% lift in pro forma revenue to $987.8 million.
Management notes that revenue growth in Trade and Specialist Wholesale segments was partially offset by declines in the Retail and New Zealand segments.
And while pro forma EBITDA fell 7.2% to $132.5 million and net profit after tax was down 13% to $40.8 million, management appears to believe that it is turning a corner with its margins. This could explain why the ASX 200 share is charging higher today.
During the half, Bapcor has undertaken key management actions to reduce complexity and simplify the business. These are expected to deliver $20 million to $30 million of savings in FY 2025.
Actions include commencing the rationalisation of its supply chain by transitioning smaller warehouses into its major distribution centres, reducing non-customer facing head office roles, and the sale of non-core assets.
Commenting on the six months, the ASX 200 share's 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.
Outlook
No guidance has been given for the full year, but management provided an update on its performance between 1 January and 14 February.
It revealed that sales were up 0.5% during the period with Trade up 3.7% and offset by weakness in Retail and Wholesale. McKay said:
The start to 2H25 has been consistent with the return to work by the industry and we are confident with the balance of the year. With respect to our targeted $20-30M savings, we expect to deliver at the top end of our stated range. Savings are expected from the DC rationalisation program and the full effect of our headcount reduction program implemented in the first half.
