Bapcor (ASX:BAP) outlined a difficult first-half performance and a balance sheet reset in an earnings update led by newly appointed CEO Christopher Wilesmith, who said he had been in the role for four weeks. Joined by CFO Kim Kerr, management pointed to weakening trading conditions across all operating segments, a large New Zealand goodwill impairment, and a series of operational issues that executives said are now being addressed through a narrower set of turnaround priorities and a $200 million equity raising.
First-half results impacted by New Zealand impairment and weaker trading
For the first half of FY2026, Bapcor reported group revenue of AUD 973 million, down 2.3%. Statutory net profit after tax was a loss of AUD 104.8 million, which included AUD 110.3 million post-tax of significant items, driven largely by an impairment of goodwill in the New Zealand segment. Underlying NPAT was AUD 5.5 million, which management said was 87.2% lower than the prior corresponding period.
Segment performance: declines across trade, network, retail, and New Zealand
Wilesmith described the first-half performance as “sobering,” saying the business had “lost momentum” in recent years. He attributed New Zealand’s weakness primarily to macroeconomic conditions, while describing the Australian performance as influenced by competitive dynamics and “more self-inflicted” issues, including lost pricing discipline and customer perceptions that Bapcor had become uncompetitive.
Management highlighted that trade and network (specialty wholesale) are the group’s two largest business areas, contributing 39% and 32% of group revenue, respectively, and together representing about 75% of group EBITDA.
- Trade: Sales were down 1.7%. Wilesmith said the tool and equipment business saw a “very significant pullback,” which he linked to loss of senior expertise. He also cited currency impacts on imported products and said pricing had not kept pace in the market.
- Network: Revenue declined 2.4%, which Wilesmith said was impacted by a “significant restructure” that was disruptive during the period. He noted JAX had recorded five consecutive months of growth, while CVG was affected by loss of key accounts amid transport industry consolidation and staffing shortfalls that are now being addressed.
- Retail: Revenue declined 1.9%. Wilesmith said EBITDA was pressured by cost escalation and uncompetitive pricing. He pointed to what he called the strongest Autobarn growth in the last 12 months occurring “just yesterday,” attributing early momentum to a new “100-day recovery plan” under retail leader Dean Austin.
- New Zealand: Revenue fell 3.9% year-over-year in NZD and 5.9% on translation into the group’s consolidated results. Wilesmith said November and December showed “positive signs of recovery” following sales team changes, though EBITDA still declined in line with revenue.
Operational priorities: pricing, in-stock, discounting controls, and cost efficiency
Wilesmith said he had spoken with roughly 800 employees and described a workforce seeking clarity and support from senior leadership. He highlighted progress in reducing complexity, noting ERP systems had been reduced from 34 to 16, while also acknowledging high staff turnover and the need to “stop losing good people.”
He said customers have been clear about what needs to improve: “in stock” and “the right price.” Wilesmith said there was stock in the network but “not in the right location,” and said the company is working to regain competitive pricing “over the coming months.” He also said the trade business had lost management control of discounting and that reinstating controls was already helping margins, with part of the improvement expected to be reinvested into competitiveness.
On capital efficiency, Wilesmith said the company identified around AUD 100 million of excess stock and has programs to reduce it by improving allocation and reducing replenishment of overstocked items. He also said the company is focusing on receivables and noted overdue receivables were reduced by “over about 10% in the last few weeks.”
During Q&A, Wilesmith said he found 268 initiatives underway when he joined and said the turnaround will focus on “the few that are going to make a real difference.” He also discussed cost opportunities, including supply chain settings and reduced freight costs, and said the company had spent AUD 17 million on recruiting due to high turnover, which he said could be reduced by improving culture and retention.
Equity raising, balance sheet items, and guidance
Bapcor announced a AUD 200 million equity raising, consisting of a AUD 150 million 1-for-1.36 pro rata accelerated non-renounceable entitlement offer and a AUD 50 million pro rata placement. Kerr said the offer price is AUD 0.60 per new share, representing a 65% discount to the last closing price of AUD 1.72 on 18 February 2026 and a 48.4% discount to the theoretical ex-rights price. Approximately 333 million new shares are expected to be issued, or about 98% of existing shares on issue. Proceeds are to be used “strictly” to repay debt and improve balance sheet flexibility.
As of 31 December 2025, Kerr said net debt was AUD 387.3 million, up AUD 22.5 million during the half, with net leverage at 3.39x adjusted EBITDA, within the temporarily increased covenant of 3.5x announced in December 2025. She said the raising would reduce pro forma leverage to 1.7x as of 31 December 2025. Kerr also said lender syndicate approval was received to temporarily lower the fixed charge coverage ratio covenant for upcoming testing points.
The company provided full-year expectations for underlying EBITDA of around AUD 150 million to AUD 160 million post AASB 16 (or AUD 74 million to AUD 79 million pre AASB 16). Management said net leverage is expected to reduce to between 1.2x and 1.5x by the end of June, with net debt expected to benefit from releasing AUD 60 million to AUD 75 million of cash through inventory and receivables initiatives. The company said it is targeting a net leverage ratio of no greater than 2 going forward.
Separately, Kerr said an externally supported balance sheet review led to restated FY2025 comparatives for accounting issues identified in the trade segment, reducing opening retained earnings for FY2026 by AUD 8.9 million. She also disclosed a payroll issue spanning February 2020 to the present, resulting in an AUD 4.6 million pre-tax provision, largely recorded as an adjustment to opening retained earnings.
Wilesmith closed by thanking shareholders for support and said the focus now is on executing a short list of priorities quickly to improve performance, summarizing the approach as: “So what? Now what?”
About Bapcor (ASX:BAP)
Bapcor Limited sells and distributes vehicle parts, accessories, automotive equipment, and services and solutions in Australia, New Zealand, and Thailand. The company operates through four segments: Bapcor Trade, Bapcor Specialist Wholesale, Bapcor Retail, and Bapcor NZ. The Bapcor Trade segment offers automotive aftermarket parts and consumables to trade workshops for the service and repair of passenger and commercial vehicles; automotive workshop equipment, such as vehicle hoists and scanning equipment, including the servicing of the equipment; and automotive accessories and maintenance products to do-it-yourself vehicle owners.
