RPM Automotive Group Limited has released its results for the six months to December 31, 2023 (H1 FY24), announcing a 74% increase in net profit after tax to $2.2 million (H1 FY23: $1.2 million).
The company says its revenue was up 2.2% to $56.9 million (H1 FY23: $55.7 million) through diversified product offerings and increased cross-selling, up 16.2% to $19.9 million (H1 FY23: $17.1 million) driven by benefits from operational optimisation program and scale.
It says EBITDA was up 23.4% to $5.4 million (H1 FY23: $4.3 million), and the acquisition of Chapel Corner Tyres strengthened the wholesale tyre division.
“Over the past six months, we have shown our ability to harness our complementary divisions in more challenging trading conditions, delivering a record half-year profit. Our focus has been on optimising operational resources and consolidating our brand portfolio to establish a prominent national presence across the Australian automotive aftermarket sector,” RPM Automotive Group chief executive Clive Finkelstein says.
“By enhancing our operational efficiencies, diversifying our product offering, and leveraging data and analytics to drive further cross-selling, we have delivered results that align with guidance, with improved profitability and operating cash flows.
“Our acquisition and integration strategy remains pivotal to our next growth phase, with Chapel Corner Tyres joining the RPM Group during the half, bringing us closer to becoming a household name by expanding our footprint both in Victoria and nationally.”
Overview of H1 FY24 Results
RPM generated $56.9m in H1 FY23, an increase of 2.2% on the prior corresponding period (PCP). Ongoing benefits from operational efficiencies and scale across the four divisions resulted in a rise of 23% in EBITDA to $5.4 million.
Total gross profit increased to $19.9 million, up 16.2% from H1 FY23, or 420 basis points. This was due to improved margins from optimising operations, quality procurement, and focusing on selling features and benefits rather than price. Resulting in a record Net Profit After Tax of $2.2 million, up 74% on PCP.
Division Commentary
In H1 FY24, Wheels and tyres (wholesale tyres) generated revenue of $20.2 million, a 10% increase on PCP. Growth was driven by the acquisition of Chapel Corner Tyres and access to a broader range of market-leading products. It imported exclusive brands across passenger vehicles, trucks & buses, and industrial applications. RPM’s optimisation strategy has improved margins, while the focus on inventory management has delivered improved stock turns.
RPM’s Repairs and Roadside division performed consistently despite cost-of-living pressures, with $20.7 million in revenue, down 9% on PCP. While revenue was slightly lower, division Gross Profit and EBITDA improved due to our optimisation and rationalisation program focussing on more profitable work. The commercial tyre business continues to actively canvass new fleet businesses to grow the division and expand.
RPM’s national presence
Performance and Accessories improved its product range, expanded distribution, and entered new locations, delivering $12.9 million in revenue this half. RPM’s current fleet and OEM contracts are underway and are expected to increase in the second half of FY24 with the addition of a new distribution opportunity, signed post-reporting period. In addition, RPM has recently launched an internally developed robotic caravan and boat mover, which is expected to drive further growth in sales in 2H FY24.
Motorsport continues to cement itself as a leading destination for all soft parts and safety categories in motorsport through a broad range of brands (including RPM’s range) at different price points, delivering $4.5 million in revenue, an increase of 6.4% compared to H1 FY23.
During the half, RPM opened a new Revolution Racegear store in Gold Coast, the Company’s most significant growth corridor, with many leading teams and drivers in the region.
Outlook
RPM is well positioned to navigate the dynamic landscape of the Australian automotive aftermarket, with several new group-wide initiatives to be introduced that are designed to deliver sustainable growth throughout 2024.
RPM will further advance its Tyre Recycling Strategy, which is scheduled for rollout during 2H FY24. This builds on RPM’s established sustainable practices across its supply chain, ensuring all materials in its tyre production process originate from ethically responsible sources.
The Company remains committed to the seamless integration of acquisitions, optimising inventory management efficiency and exceptional ongoing customer service.
It expects a stronger second half, with group revenue exceeding $130 million and EBITDA rising from $11 to $13 million in FY24.
