Cautious Bapcor Reinstates Guidance




Car parts retailer and distributor Bapcor has joined the small group of companies reinstating previously dropped earnings guidance for 2019/20 as it gets a better handle on life in a COVID-19 world.

Pathology giant, Sonic also reinstated its guidance this week and Bapcor shared similar sentiments yesterday of life and revenues doing better as the year has gone on the virus brought under control.

Bapcor withdrew its guidance for the June 30 financial year in March as governments rolled out lockdown measures to control COVID-19.

That guidance was for “Full Year FY20 Pro-forma NPAT to increase by middle single-digit percentages compared to FY19, which will deliver a record full-year result in revenue, earnings and earnings per share.”

The company earned a net after-tax profit of $94.3 million for the 2018-19 financial year and yesterday’s reinstatement contained a figure that fell short of that level.

Bapcor said it “now anticipates that Net Profit After Tax (before significant items) for the financial year ending 30 June 2020 will be in the range of $84 million to $88 million, subject to normal year-end audit procedures.”

The shares fell 1.7% to $5.79.

While news of the improvement was welcomed, investors did not the very circumspect outlook comment in yesterday’s release. The last paragraph said:

“Future demand is anticipated to moderate as we enter the new financial year in an environment of economic uncertainty and as government stimulus reduces.”

That is not a confident or upbeat assessment of the coming year.

In its statement, yesterday Bapcor pointed to the easing of trading restrictions and lockdowns as helping the company.

“…with the easing of these restrictions, Bapcor’s businesses have experienced stronger than expected demand, particularly in the Retail and Burson Trade segments in Australia.

“In addition, most of the other businesses are recovering more quickly than anticipated in returning to their pre-COVID-19 demand levels,” Bapcor said in a release on Thursday.

Bapcor said its retail segment - which also includes AutoPro, CarParts, and Sprint - experienced strong demand in May and June, with Autobarn same-store sales increasing more than 45% from the prior year.

This followed on from April same-store sales falling 3% below the prior year. Same-store sales growth was achieved in both the company-owned stores and franchised stores.

On a full-year basis to the end of June 2020, it is estimated Autobarn same-store sales increase will be about 8%. Burson Trade has also experienced strong demand in May and June with same-store sales growth expected to be about 10 percent above the prior year.