The Bapcor Ltd (ASX: BAP) share price is up over 5% in reaction to its FY19 result.
Originally called Burson Group, Bapcor is a specialist auto parts business. What most consumers don’t know is that it’s more than a retailer of spare parts. Its bread and butter is trade services. For example, when you get your car serviced by a mechanic, the mechanic doesn’t store all of the parts for the make and model of your car in their shop. Instead, they rely on a nearby distributor like Burson’s who can deliver the exact parts within a matter of hours.
Bapcor Drives FY19 Profit Higher
The Bapcor share price has reacted positively to the company’s results.
The auto parts business reports a number of different profit measures due to the company’s various acquisitions and divestments that it has made.
Continuing operations refers to what businesses remain as part of the Bapcor business. Pro forma results include adjustments for mergers, acquisitions and restructuring activities and any unusual one-off transactions.
Revenue from continuing operations increased by 4.8% to almost $1.3 billion. Pro forma EBITDA from continuing operations rose by 9.8% to $164.6 million (click here to learn what EBITDA means).
Pro forma net profit after tax (NPAT) increased by 9% to $94.3 million. Statutory net profit rose by 14.8% to $97 million.
At the start of FY19 Bapcor divested TRS, a New Zealand business but it wasn’t classified as a discontinued operation and was included in the last result. Excluding TRS revenue would have been 6.9% higher, pro forma EBITDA would be 11.7% higher and pro forma net profit would have been 11.2% higher.
The most important segment, Burson, grew revenue by 4.6% and had same store sales growth of 2.2%. EBITDA increased by 8.5% thanks to an increase of the EBITDA margin by 0.8%.
Bapcor New Zealand saw revenue growth of 7.4% and EBITDA growth of 13.8%. The specialist segment increased revenue by 13.4% and EBITDA rose by 20%.
However, the retail segment grew by 6.8% but EBITDA dropped 6% because of all the new stores which are loss making at the start.
Bapcor Dividend
The Bapcor Board grew the full year dividend by 9.7% to 17 cents per share, which was another solid increase.
Bapcor Management Comments
Bapcor CEO and Managing Director Darryl Abotomey said: “Bapcor remains positive regarding the fundamentals of the automotive market and is excited about the many opportunities of the business including further network growth, procurement and supply chain efficiencies and own brand growth.”
Is The Bapcor Share Price A Buy?
Bapcor said it expects to grow its pro forma net profit by mid to high single digits in FY20. But due to higher depreciation from the investing Bapcor is doing, EBITDA growth will be higher than net profit.
I’m quite interested in Bapcor’s growth prospects in Asia with four greenfield stores so far. The store profit ramp up is similar to Australian trade stores.
Bapcor could be a good way to compound profit growth for a relatively low price, but electric vehicles and automated vehicles could cause an issue in the coming years. I’d rather buy the growth shares in the free report below instead due to the future uncertainty.
[ls_content_block id=”14947″ para=”paragraphs”]
[ls_content_block id=”18380″ para=”paragraphs”]
