Bapcor to keep cutting costs

Shares in auto parts distributor Bapcor have surged as the company confirmed the continuation of its cost-cutting regimen amid economic headwinds that have affected net profit forecasts.

Bapcor’s unaudited preliminary results showed revenue of $1.02bn for the six months, up 2 per cent year-on-year, reflecting a stronger performance in its trade and wholesale business, which supplies workshops and garages.

However, that was offset by a weaker retail section – hit by a decline in consumer confidence – and higher finance costs. The company expects net profit after tax of between $53m and $54m, down 13 per cent to 14 per cent from $62m in the corresponding six months in FY23.

Bapcor said the retail segment was negatively impacted by a decline in consumer confidence that reduced discretionary spending, as well as lower fitment and installation volumes in some categories such as bull bars and roof racks.

“In addition, finance costs increased by $7m compared to the prior year, largely due to higher interest rates,” it said.

Bapcor said it continued to execute its Better than Before transformation program to deliver longer term growth. It said in the first half of FY2024 further progress was made and it expected its pro-forma net profit after tax to further benefit in the next six months.

“Given the prevailing macroeconomic challenges and current cost of business inflation, Bapcor will implement additional cost saving initiatives in 2H24, while maintaining best-of-class customer service,” Bapcor said.

At noon Bapcor shares opened lower but were up 7.2 per cent to $5.65 in afternoon trade.

Over the past 12 months its shares have fallen almost 12 per cent, as the company, under chief executive and managing director Noel Meehan, initiated as cost cutting regime that included laying off almost 100 workers last November.

In October Bapcor disappointed the market with a softer than expected trading update.