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The S&P/ASX 200 Index (ASX:XJO) started the trading week on a positive note, gaining 0.31%. Amid this performance, Bapcor Ltd (ASX: BAP) shares stood out with a remarkable 6.74% surge, climbing from $5.27 to $5.62. The surge in Bapcor shares can be attributed to the trading update the company released before market open. The update covered Bapcor's preliminary, unaudited performance for the first half of the financial year (1H24), ending on December 31, 2023. This notable increase underscores Bapcor's strength in the market, and among ASX consumer stocks, it emerges as a standout performer for the week.
Bapcor reported a revenue of $1,018 million for 1H24, reflecting a 2% increase from the $1,001 million reported for the same period in 2022 (1H23). Pro-forma EBITDA is estimated to be between $142 million and $144 million, representing a 1% to 3% decrease from 1H23's $146 million. Net profits after tax (NPAT) are expected to range between $53 million and $54 million, indicating a 13% to 15% decline from 1H23's $62 million.
The decline in earnings is attributed to challenges in the retail segment, where revenues dropped by 3%. Factors such as reduced consumer confidence affecting discretionary spending and lower fitment and installation volumes in certain categories contributed to the negative impact. Additionally, higher interest rates led to a $7 million increase in financing costs compared to 1H23.
Bapcor CEO Noel Meehan acknowledged the disappointing results due to macroeconomic headwinds affecting the Retail business. Despite this, he expressed confidence in the ongoing profitable growth in the Trade and Wholesale businesses. To address the challenges, the company has committed to additional cost-saving measures in the second half of the current financial year.
The share price movement is particularly noteworthy for Bapcor shareholders who have experienced significant losses in recent months. Even after today's gains, Bapcor shares are down by 11.9% over the past 12 months and over 20% since September 2023. The company aims to improve operational performance through its transformation program, providing confidence for the second half of the financial year.
As of the current Bapcor share price, the company has a market capitalization of $1.78 billion, with a trailing dividend yield of 3.95%.
