Bapcor share price in focus after solid FY 2020 result

The Bapcor Ltd (ASX: BAP) share price could be on the move on Wednesday following the release of its full year results.

What happened in FY 2020?

Like most companies, Bapcor had a difficult 12 months in FY 2020 following the bushfires, drought, and of course the COVID-19 pandemic. These combined to have an adverse impact on its financial performance.

Positively, despite these challenges, Bapcor delivered a solid result in FY 2020 and believes it is in a very solid financial position to optimise on opportunities as they arise.

For the 12 months ended 30 June 2020, Bapcor delivered a 12.8% increase in revenue from operations to $1,462.7 million. This was driven by a combination of organic and growth through acquisitions. Excluding the latter, revenue would have been up 7% year on year.

This growth was driven by its Trade, Specialist Wholesale, and Retail businesses, which more than offset weakness in the Bapcor NZ business.

Trade revenue grew 7.1% to $561.7 million, Specialist Wholesales revenue increased 26% to $520.4 million, and Retail revenue rose 14.7% to $292.7 million. Bapcor NZ’s revenue fell 5.2% to $156.3 million.

It was a similar story for the earnings of these businesses, which ultimately led to its pro forma earnings before interest, tax, depreciation, and amortisation (EBITDA) pre AASB16 falling 4.1% to $157.8 million in FY 2020. Including AASB16, its pro forma EBITDA was up $59.3 million to $217.1 million.

On the bottom line, Bapcor reported a 5.5% decline in pro forma net profit after tax (before AASB16) to $89.1 million.

Despite this decline, the Bapcor board has declared a final dividend of 9.5 cents per share, which is consistent with last year’s final dividend. This brings its full year dividend to a fully franked 17.5 cents per share, which is up 2.9% on the prior corresponding period.

It is worth noting that due to its strong financial position, the company has decided to suspend the operation of its dividend reinvestment plan for the FY 2020 final dividend.

Management commentary.

Bapcor CEO & Managing Director, Darryl Abotomey, was pleased with the company’s performance given the challenging trading conditions.

He said: “… despite the circumstances Bapcor’s talented team members have been able to deliver a commendable result for FY20, with Proforma EBITDA being down 4.1% and Proforma Net Profit After Tax being only 5.5% below the record earnings that were achieved in FY19. Record revenue was achieved by the group, driven by record revenue and earnings in our Burson Trade and Retail businesses and the addition of the Truckline business in December 2019.”

The chief executive remains positive on the company’s long term prospects, but warned of short term challenges. As a result, no guidance for FY 2021 was given with this result.

He commented: “The market fundamentals and opportunities will continue to drive profit growth in the future, however given the current economic uncertainties and unknown future impacts of COVID-19 Bapcor is not in a position to provide a forecast of earnings for the current year. An update on trading conditions will be provided at the Annual General Meeting in October.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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