Bapcor’s strategic update sets a clear target for improved EBITDA margins of ~350bp over five years. While quantified drivers were not disclosed, in essence reducing business complexity and improving the calibre of people running the businesses should lead to better margins. Given the history as a roll-up, simplification of systems makes sense.  However, much of the margin improvement needs to come from Retail and Specialist Wholesale. There is a risk these businesses shrink to lift margins. We expect investors to wait for evidence of traction on margin improvement.

Bapcor reported 1H25 underlying sales up 0.3% and EBITDA of $132 million, down 8%. Sales have started the second half up slightly. The full year cost saving guidance for $20 to $30 million has been reiterated and will lead to lower total costs in 2H25e, supportive of an improvement to EBITDA. Bapcor will host a Strategy Day in late April 2025 at which the new CEO will provide more clarity on the strategic direction.