Car Bound Consumers Help Bapcor Drive Growth




Autoparts retailer and distributor, Bapcor has joined the growing list of earnings updaters with news of a 50% plus jump in December half-year earnings because of continuing strong sales.

Bapcor owns chains Autobarn and Burson Auto Parts told the ASX on Thursday it is still experiencing higher sales in a post-pandemic/lockdowns environment.

The company joined Nine Entertainment (which revealed an update to an update on Thursday as well), Adairs, and Beacon Lighting which have revealed late December half updates.

Bapcor shares jumped more than 7% to $8.05 as the company confirmed the 27% jump in sales reported in an October update, had continued into November.

Bapcor said sales were up 26% for the five months to November 30.

But the strong early rise ran out of puff and the rise was cut back to a gain of around 3% at $7.53.

Bapcor said it continues to enjoy leverage from lower consumer spending in areas such as travel, as well as lower interest rates and a contribution from its Truckline business.

The company said it expects first-half revenue to be up "at least 25% over the PCP in FY20, and Net Profit after Tax increase of at least 50% over the PCP in FY20 which was $45.6m”.

That will put the net profit of around $68 million.

Market consensus for Bapcor’s full-year net profit after tax currently ranges from $110m to $115m, which prima facie does not appear unreasonable. However, considering the uncertain economic conditions, we will update on our view of the full-year outlook as part of our half year results in February 2021.

CEO, Darryl Abotomey said “We are very pleased with the strong performance of Bapcor’s businesses. Trade and wholesale represent over 80% of Bapcor’s business, with Retail c. 20%. Historically, trade focussed businesses perform solidly in difficult economic conditions – which is again borne out by Bapcor’s current performance.”

"In addition the changes that have been implemented in our retail business continue to gain momentum with revenue up c.40% over the PCP. Initiatives include the recently launched new Autobarn store format that is delivering a significant uplift in sales.

"This is supported by changes in our overall retail “go to market” strategy with improvements in our on-line capabilities, our revitalised catalogues, expanded and exciting new product ranges and continued footprint expansion which are expected to continue to drive above market growth going forward.

"The construction of our new Victorian Distribution Centre is progressing well with the building expected to be handed over in February 2021 and the automated picking system operational in the following six months. This is an exciting development that will deliver significant operational benefits.”