Bapcor posts $5.5M underlying profit as turnaround plan takes shape
Bapcor Limited has reported a challenging first half of the 2026 financial year, posting underlying net profit after tax of $5.5M compared to a statutory loss of $104.8M. The automotive parts and accessories retailer’s 1H26 results reflect the impact of heightened competition, cost inflation and now-complete consolidation disruption, while a new leadership team works to implement turnaround initiatives with positive momentum beginning to emerge.
The company generated revenue of $973M (down 2.3%) with gross margin of 44.9% (down 154bps). The statutory loss includes $110.3M in post-tax significant items primarily related to a $99.9M impairment of New Zealand goodwill and $2.7M in store impairments.
Management has paused the interim dividend and strengthened financial controls as part of broader balance sheet repair efforts. An equity raising forms part of the company’s strategy to reduce leverage and provide headroom for operational recovery.
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What do these results mean for investors?
Understanding Bapcor’s 1H26 results requires distinguishing between underlying and statutory numbers.
The underlying profit of $5.5M strips out one-off items to show operational performance. This measure excludes the New Zealand goodwill impairment (reflecting worsening macro conditions and margin compression), $2.1M in stocktake losses across Precision branches, $1.9M in restructuring costs and $2.8M in inventory valuation adjustments.
The statutory loss of $104.8M includes all these charges. While the headline number appears severe, the underlying figure better reflects the business’s current trading position.
Investors should note the company has strengthened financial processes following detailed balance sheet examinations. A $4.6M provision relates to payroll issues identified during reviews, with $4.4M attributed to prior years.
The dividend pause preserves approximately $37M annually to support debt reduction and operational investment.
Segment performance reveals mixed picture across the portfolio
Trade segment faces competitive headwinds
The Trade segment generated revenue of $387.1M (down 1.7%) with EBITDA of $54.9M (down 32.7%). Parts revenue declined 1.1% driven by heightened competition and high store manager turnover, while Tools & Equipment fell 9.1% due to competitive pressure and foreign exchange headwinds.
EBITDA margin compressed to 14.2% (down 655bps) reflecting competitive discounting, cost of goods price increases and broader cost inflation in labour and occupancy. The 1H25 result also benefited from a $4M non-recurring provision release.
Management opened three new branches across Queensland and South Australia, plus one in Thailand, bringing the total to 245 branches. The broader expansion programme is now under review.
Leadership appointments include experienced executives for EGM Trade, General Manager Commercial and General Manager Sales & Marketing. Performance improvement plans launched in 2H26 focus on pricing, sales, store ranging and recruitment.
Networks stabilises after integration disruption
Networks revenue reached $312.4M (down 2.4%) with EBITDA of $32.1M (down 2.8%). The segment comprises Specialist Networks (down 3%) and Wholesale (down 0.7% on prior period, but up 8.9% on 2H25).
JAS Auto Electrical sales have grown month-on-month for five consecutive months following FY25 restructuring. CVG was impacted by the loss of key accounts but is working to secure new opportunities. The Wholesale business delivered a record December as the new combined product, sales and marketing team gained traction.
The South Island distribution centre became fully operational in February 2026, improving delivery times and service levels. Branch count reduced to 117 from 142 as network optimisation continued.
Retail shows early recovery signs
Retail segment revenue was $205.2M (down 1.9%) with EBITDA of $16.8M (down 28.9%). Trading improved through Q2 following strong Black Friday and pre-Christmas performance. Same store sales declined 1.4%, an improvement of 60bps on prior period.
Online sales surged 28% as the Autobarn and Autopro websites gained traction. The Accelerate loyalty programme reached 1.9M members (up from 1.7M at June 2025) with 970k active members, representing 7% growth.
Network optimisation included closing three underperforming stores, refurbishing six sites and converting one franchise to company ownership. Total store count stood at 338 (121 company-owned, 217 franchise).
Dean Austin joined as EGM Retail in December with 30+ years retail experience, implementing a 100-day performance plan.
New Zealand battles macro headwinds
New Zealand revenue declined 5.9% in AUD terms (down 3.9% in NZD) to $82.0M. EBITDA fell 31.4% to $10.1M as margins compressed from customers shifting to lower-margin products alongside increased competition.
Sales improved through November and December supported by promotional activity and in-field execution. The new Dunedin Supersite opened, combining four brands in one location and closing three sites, with three additional supersites planned.
The South Island distribution centre ensures supply resilience and improves delivery times. A Vehicle On Road (VOR) system was developed to align ranging with localised car parc supply.
| Segment | Revenue (1H26) | Change | EBITDA (1H26) | Change |
|---|---|---|---|---|
| Trade | $387.1M | -1.7% | $54.9M | -32.7% |
| Networks | $312.4M | -2.4% | $32.1M | -2.8% |
| Retail | $205.2M | -1.9% | $16.8M | -28.9% |
| New Zealand | $82.0M | -5.9% | $10.1M | -31.4% |
January trading update shows positive momentum building
January 2026 like-for-like sales data suggests turnaround initiatives are beginning to gain traction in key segments, although challenges persist in Trade.
- Trade: -2.4%
- Networks: +0.7%
- Retail: +0.3%
- New Zealand (NZD): +3.5%
- Total Group (AUD): -0.9%
Trade continued to experience difficult trading conditions through Q3 with actions being implemented to improve sales performance. Networks benefited from positive growth in both JAS Auto Electrical and the Wholesale business, although CVG sales remained impacted by customer losses in 1H26.
Retail achieved positive like-for-like growth supported by promotional activity, while New Zealand maintained momentum from strong promotional execution and in-field sales efforts.
New CEO outlines path to operational recovery
Chief Executive Officer Chris Wilesmith, who brings over 20 years of automotive industry experience, has outlined the company’s turnaround framework.
Chris Wilesmith, CEO & Managing Director
“Fundamentally a good business with solid foundations. Operates in an essential industry, supported by long term demand from expanding and aging car parc. Team has a strong commitment to serving customers.”
The turnaround strategy rests on four pillars:
Return to growth: Stabilising the team, rectifying price position and improving in-stock positions.
Enhance profitability: Improved discounting controls, range and merchandising review, improved branch-level ranging and category mix management.
Optimise cost of doing business: Removal of non-value add activities across the group and group-wide review of all major costs.
Capital efficiency: Identification of excess inventory to redeploy where needed and increased focus on collection of debtors.
Management acknowledged that loss of industry knowledge and expertise over time has impacted customer experience and market share, whilst pricing and stock availability issues have reduced competitiveness. The business remains overly complex with further work required to simplify and integrate operations.
Recent leadership appointments bring over 20 years of combined automotive and retail experience, including Craig Magill as EGM Trade (25+ years automotive aftermarket) and Dean Austin as EGM Retail (30+ years retail).
Balance sheet strengthened with equity raising and covenant amendments
Bapcor reported net debt of $387.3M pre-equity raising with a leverage ratio of 3.39x. The company secured covenant amendments in December 2025 to temporarily increase the net leverage ratio covenant to no more than 3.5 times for the 31 December 2025 and 30 June 2026 testing points.
Further lender syndicate approval was received on 25 February 2026 to lower the Fixed Cover Charge Ratio (FCCR) covenant to at least 1.4 times for 30 June 2026 and at least 1.5 times for 31 December 2026 testing points before returning to at least 1.75 times at 30 June 2027.
Post-equity raising, the proforma leverage ratio reduces to 1.70x (from 3.39x). The company has over $339M in undrawn committed facilities providing operational headroom.
Management expects the leverage ratio to reduce to approximately 1.2x-1.5x by 30 June 2026, benefiting from $60M-$75M of cashflow in 2H26. This will result from specific initiatives focused on reducing inventories and receivables alongside improved operating cash flows.
Cash conversion for 1H26 was 93.4% (down from 108.5% in 1H25), reflecting weaker operating performance. The facility maturing in July 2026 will be repaid through the temporary $100M facility refinanced in June 2025, with total facilities reducing to $720M thereafter.
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FY26 guidance points to recovery trajectory
Management provided full-year guidance for underlying EBITDA of $150M-$160M (post-AASB16) or $74M-$79M (pre-AASB16). The leverage ratio is expected to reduce to 1.2x-1.5x by 30 June 2026.
The guidance reflects management setting realistic expectations while executing the turnaround plan. Bapcor operates in an essential industry with non-discretionary demand underpinned by Australia’s expanding and aging car parc. The vast majority of sales come from non-discretionary products, providing a defensive revenue base.
The company trades at depressed levels reflecting operational challenges and balance sheet constraints. The combination of new leadership with deep automotive and retail experience, balance sheet repair through the equity raising and covenant amendments, and non-discretionary demand tailwinds creates potential for re-rating as execution progresses.
The turnaround hinges on rebuilding capability and knowledge in team members, refocusing the business on customers through improved pricing and stock availability, leveraging recent leadership appointments and rebuilding productive relationships with suppliers.
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