GUD Holdings Revs Up On Auto Expansion

Shares in Sydney-based GUD Holdings hit an all time high yesterday after it revealed a continuation of its move to go has deeper into the car parts business with a $20 million acquisition of Disc Brakes Australia Pty Ltd (or DBA).

GUD shares rose 3.8% to $13.40 in a market that was in the red all day. It was a record close for the stock.

DBA operates in the automotive aftermarket through supplying a range of disc brake rotors, brake drums and disc brake pads.

And that’s one of two areas (the other is pumps) where GUD has been concentrating on over the past three years while it disentangled itself from unwanted operations in other sector, such as water and household appliances.

Since 2015 GUD has sold its Sunbeam, Dexion, Lock Focus and Oates business (Dexion was a loss-making black hole), and it has bought BWI, Griffiths Equipment, IM Group and AA Gaskets, and yesterday, DBA.

GUD says that with over 40 years of manufacturing experience and continued research and development "DBA has positioned itself as the premium choice of disc brake rotors in the Australian automotive aftermarket. Disc Brakes Australia was originally established by the Joseph family and it markets its products and services under the DBA brand.”

Customers include the three major automotive industry distributors – Bapcor, Repco and Supercheap – along with smaller automotive wholesalers and performance specialists.

GUD said yesterday DBA has an annual sales turnover of around $20 million and generates an annual earnings before tax and interest of around $3 million. Consideration for the acquisition is $20 million, with a net working capital adjustment at settlement on July 2.

DBA will form part of the GUD Automotive business under the Ryco Group and, in combination with GUD’s Ryco, Goss, Wesfil, Narva and Projecta brands, will be positioned as the major independent supplier of disc brake rotors to the Australian aftermarket.

There was no further update to trading in yesterday’s statement. Last month GUD said it was “expecting full year underlying EBIT of around $90m with 7 months of AA Gaskets and only 6 months of Oates.”

It also said there would be a one off after tax profit of $47 million from the Oates sale to be accounted for.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

View more articles by Glenn Dyer →