Australian auto parts supplier and retailer, Bapcor, announced its plans to reduce costs in the second half of its 2024 fiscal year following a decline in retail revenue due to weakening consumer confidence.
Retail Revenue Decrease
Bapcor reported a 3% decrease in unaudited retail revenue for the six months leading up to December compared to the same period the previous year. Furthermore, it expects a decline of 11% to 14% in unit earnings before interest, tax, depreciation, and amortization on a pro-forma basis.
Finance Costs Surge
The company also experienced a substantial increase in finance costs, jumping by 58% year on year. Consequently, the unaudited net profit at the group level is projected to range between 53 million Australian dollars (US$34.8 million) and A$54 million on a pro-forma basis. This is compared to A$62 million during the same period in the previous year.
Factors Impacting Results
Noel Meehan, Chief Executive and Managing Director of Bapcor, expressed his disappointment with the results, attributing them to general macroeconomic headwinds affecting the retail business, as well as increased inflation in the cost of doing business and higher interest rates.
Prospects for Second Half
Bapcor forecasts a positive impact of between A$7 million and A$10 million on its pro-forma net profit in the second half of the fiscal year due to its ongoing transformation project. In addition, it anticipates a run-rate improvement of approximately A$2 million based on actions implemented in the December quarter. The company is also planning for further cost savings in the second half of the year.
Strong Trade and Wholesale Performance
Despite the challenges faced in the retail sector, Bapcor's trade and wholesale business experienced an increase in unaudited first-half group revenue, rising by 2% to reach A$1.02 billion.
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