Bapcor lifts dividend by 7.5% but FY22 profits miss expectations
Bapcor expects a solid FY23 driven by normalising inventories and positive macroeconomic trends
Mentioned
KEY POINTS
- Bapcor's net profits rose 5.9% to $125.8m, slightly below Bloomberg estimates of $127.8m
- Retail sales were skewed towards the second-half as covid-related disruptions eased
- Elevated inventory levels are expected to normalise in FY23
Bapcor (ASX: BAP) shares are chopping around breakeven after the company reported FY22 earnings that fell shy of expectations.
Net profits rose 5.9% to $125.8m which was slightly below Bloomberg estimates of $127.8m.
Results at a glance
Full year | 2022 | 2021 | Change % |
|---|---|---|---|
Revenue ($m) | 1,841.9 | 1,761.7 | 4.6 |
EBITDA ($m) | 291.5 | 279.5 | 4.3 |
EBITDA margin (%) | 15.8 | 15.9 | -4 bps |
Net profit | 125.8 | 118.8 | 5.9 |
Final dividend (cps) | 11.5 | 11.0 | 4.5 |
Full year dividend (cps) | 21.5 | 20.0 | 7.5 |
Cash ($m) | 80.2 | 39.6 | 102.6 |
Source: Bapcor | Table: Market Index
Solid automotive aftermarket demand
"Demand drivers in the automotive aftermarket remain positive and supported our revenue increasing 5% year-on-year, or 26% over a two-year period," commented Bapcor CEO Noel Meehan.
"During the last year, we also continued to expand our network by opening 31 stores (10 in Trade, 14 in Specialist Wholesale and seven in Retail)," he added.
Things to note
Bapcor Trade and Retail segments, which contributed a combined $1.08bn in revenue (59% of Group), both experienced a stronger second half as lockdowns and covid impacts subsided.
Earnings (EBITDA) margins were surprisingly intact at 15.8%, down from 15.9% in FY21 and ahead of Morgans expectations of 15.4%. Bapcor said the stable margins were "reflective of focus on category and pricing strategies, as well as cost management".
Bapcor highlighted its inventory availability as a key competitive advantage. Inventories as at 30 June 2022 sat at $538.7m, up from $447.1m a year ago. The company said it expects inventory levels to normalise in FY23, subject to global supply chain risks.
FY23 outlook
Bapcor did not provide any update regarding July or August sales. The company said it expects a "solid underlying performance in FY23", supported by:
Positive macroeconomic trends
Normalisation of currently elevated working capital levels
Enhanced distribution capabilities
Bapcor share price chart
