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Embattled auto equipment retailer Bapcor has revealed it is on track to deliver savings of between $20 million and $30 million to the bottom line in FY25 following head-office redundancies and other cost-saving initiatives, as new CEO Angus McKay today detailed to shareholders the company’s progress during his first eight weeks into the role.
McKay, who was appointed both CEO and executive chairman at Bapcor on 22 August this year, says total revenue for the first quarter of the current financial year is up 0.7 per cent compared to the previous corresponding period.
However, this compares with 0.8 per cent revenue growth to $2 billion for FY24 in a challenging year that was impacted by a fall in sales across its retail division which includes the Autobarn and Autopro chains.
“Bapcor’s Australian trade and Specialist Networks businesses are performing well,” says McKay. “The retail environment, and our performance in it, continues to be more challenged.”
Bapcor posted a bottom-line loss of $158.3 million in FY24, led by the impact of $253.1 million in significant items due to writedowns in its retail division.
The company, which also owns the Midas and ABS brands, also had to fend off an unsolicited $1.8 billion takeover offer from Bain Capital Private Equity in June, with the bid rejected a month later for undervaluing the company amid its planned restructure.
Addressing shareholders at the Bapcor AGM for the first time today, McKay says that the company is focusing on “simplification and the basics of running our businesses well to enhance growth, to reset the cost base and drive a more efficient business that benefits customers and the employees that serve them”.
“We are well progressed on the operational improvements,” he says.
As part of its cost-cutting initiatives, Bapcor has slashed 100 non-customer facing roles from its head office and exited operations from a quarter of the planned warehouse consolidations to the company’s central state-based distribution centres. Bapcor is closing down several of its smaller warehouses to cut costs.
“These actions are expected to deliver savings of $20 million to $30 million in FY25, skewed to the second half,” says McKay.
McKay’s appointment as CEO of Bapcor followed a series of leadership blows for the company earlier this year.
This was led by industry veteran Paul Dumbrell making a last-minute decision to pull out from taking on the role in April this year for personal reasons. It was a massive blow for the group as Dumbrell’s family founded Autobarn and he knows the business well.
Dumbrell was to replace Noel Meehan who left the top job in February.
A month earlier, Stefan Camphausen announced he was resigning as CFO of Bapcor, a position that has since been filled by George Saoud.
Prior to joining Bapcor, McKay led 7-Eleven Australia where he is said to have “improved profitability by embedding strong financial control and operational discipline as well as transforming culture and sustainability practices”.
Previous positions have included CEO of The Skilled Group (ASX: SKE), managing director of Pacific National Rail and CFO of Asciano Limited (ASX: AIO).
“Since commencing, my core priorities have been delivering the commitments made at the full-year results presentation, learning the business and meeting our employees and our major shareholders,” McKay told shareholders.
“I have been working with the leadership team to form a clear strategic agenda - and working fast.
“Before joining I had formed a view that Bapcor is an excellent company with great potential. Two months later that position has not changed.”
McKay, who also has talked up his track record of “improving operational performance and increasing shareholder value across a range of industries nationally”, notes that the dual role of CEO and executive chairman is what Bapcor needs at this stage.
“Although it’s less common in Australia than in other jurisdictions, Bapcor’s decision to appoint a combined executive chair and CEO is driven through careful consideration and listening to the views of our major shareholders,” he says.
“Bapcor’s board believes the combined role will improve accountability and speed of decision-making. It will also strengthen Bapcor’s ability to reset its business, drive efficiencies and ultimately grow our position in our selected markets.”
Shares in Bapcor were trading 14.5c lower at $5.045 at 12.39pm (AEDT).
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