Bapcor Faces Profit Pressure as Strategic Reset Drives Site Closures

FY25 Financial Overview

Bapcor Limited, a leading Asia Pacific provider of vehicle parts and services, has released its FY25 results revealing a year marked by transition and strategic recalibration. The company reported a slight revenue decline of 1.5% to $1.94 billion and a pro-forma net profit after tax (NPAT) decrease of 8.4% to $80.4 million. Despite these headwinds, the Trade segment demonstrated resilience with revenue growth of 1.3% and a 5.4% increase in EBITDA, underscoring its role as a core driver of the business.

Operational Simplification and Cost Management

FY25 was characterised by significant operational changes, including the closure or relocation of 70 sites and consolidation of 23 smaller warehouses into state-based distribution centres. These moves were part of a broader effort to simplify the business and reduce costs, resulting in $27.5 million in cost savings; towards the upper end of guidance. The company also invested heavily in upgrading IT infrastructure and digital platforms, aiming to enhance efficiency and customer experience across its segments.

Segment Performance and Challenges

While the Trade segment showed growth, other areas faced challenges. The Specialist Wholesale segment saw a 3.2% revenue decline but managed a 5.2% increase in EBITDA, benefiting from distribution centre rationalisation. The Retail and New Zealand segments experienced revenue and EBITDA declines, pressured by a challenging operating environment, increased competition, and softer discretionary spending. Notably, the Retail segment's EBITDA fell 16%, reflecting higher costs and lower sales in discretionary categories.

Balance Sheet and Capital Management

Bapcor’s balance sheet remains robust, with net debt rising modestly to $364.8 million, supported by over $340 million in undrawn committed facilities. The company successfully refinanced $170 million of debt, extending favorable fixed interest rates and maintaining healthy leverage ratios within covenant limits. Cash conversion improved to 81.8%, and free cash flow turned positive at $20.9 million, reflecting disciplined capital management amid transformation investments.

Strategic Reset and Outlook

Management has outlined six strategic imperatives focusing on network optimisation, supply chain efficiency, customer centricity, digitalisation, store fitness, and business simplification. Early progress includes opening 21 new branches, launching refreshed retail brands, and enhancing digital sales channels. The FY26 outlook anticipates NPAT skewed towards the second half as strategic initiatives begin to yield results. The board renewal process is well advanced, signalling a commitment to driving sustainable growth and shareholder returns.