Bapcor Revs Up Its Earnings Engines

By Glenn Dyer | More Articles by Glenn Dyer

Bapcor is Australia’s biggest supplier of parts to the car repair trade is travelling nicely at the moment – earnings for the year to June jumped more than 50%, dividend was boosted and the company is looking for another year to double digital growth in 2018-19.

Bapcor said in yesterday’s release that Consensus predictions of earnings berore interest tax depreciation and amortisation for 2018-19 “ f approximately $170M are reasonable, leading to an increase in net profit after tax of between 9% and 14% above FY18 proforma net profit after tax.”

Bapcor sells to car repair workshops and home repairers in Australia through a network of 170 Burson stores and also operates the Autobarn, Autopro and Midas chains (where its major rival is the Super Cheap Auto chain of Super Retail).

Net after tax profit jumped 57% to $84.5 million and full year dividend was lifted by 19.2% to 15.5 cents a share with a final of 8.5 cents a share, up 13%.

Despite the news investors sold the shares – they fall 3.4% to $6.90 just before the close on Wednesday.

Bapcor has made a string of acquisitions since listing on the ASX in 2014 (the issue price was $1.82) as Burson.

The name was changed following a string to takeovers as the company became what’s known as an agglomerator or roll up business (by buying rivals and becoming bigger).

It paid $275 million for the car business of Metcash in 2015 (Metcash was a willing seller as it grappled with problems in its IGA retail arm). That deal brought Autobarn, Autopro and Midas into the Bapcor stable and in 2017 took over New Zealand company Hellaby for $336 million. Some of those assets have been rationalised since.

Revenue rose 22% to $1.23 billion.

Bapcor chief executive Darryl Abotomey said the trade business was in strong shape, and the group was now aiming to expand store numbers to 230, up from a previous target of 200.

He said “FY18 has delivered a very good result for our automotive businesses which were slightly ahead of our expectations. Most pleasing is that each of our business segments have recorded good revenue and profit growth and they have executed well on opportunities that can be further built on in FY19.

“Bapcor also divested its non-core assets of Contract Resources, TBS and Footwear during the course of FY18 that will enable Bapcor to focus on its core Automotive Aftermarket businesses. Proceeds of NZ$103M from the divestments exceeded book value by NZD$7M.

“The integration of the Hellaby Automotive businesses has progressed to plan and the businesses have all performed well since their acquisition in January 2017.

Net debt at June 30 2018 was $289.5 million which Bapcor said was in line with its end of financial year target.

Glenn Dyer

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.

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