The Bapcor Ltd (ASX: BAP) share price has stormed to a record high on Monday after the release of its first quarter update.
At the time of writing the automotive aftermarket parts distributor's shares are up 6% to $8.08.
How did Bapcor perform in the first quarter?
According to the release, Bapcor has started FY 2021 strongly despite the negative impact of Government-imposed restrictions in Victoria and Auckland.
In fact, all of Bapcor's businesses have continued to perform extremely well and delivered solid growth during the first quarter in comparison to the prior corresponding period.
For the three months ended 30 September, Bapcor's revenue was up 27% compared to the first quarter of FY 2021. The key drivers of this growth have been its Retail and Specialist Wholesale businesses.
The Retail business has delivered a 47% increase in revenue thanks to Autobarn same store sales growth of 36% and AB Company same store sales growth of 50%.
The Specialist Wholesale business reported a 45% increase in revenue. This was partly due to acquisitions, with revenue up 18% excluding them.
This growth was supported by a 6% increase in New Zealand revenue and a 10% lift in Burson Trade revenue. The latter was driven by a 7.7% increase in same store sales. Excluding its Victorian stores, Burson Trade same store sales were up 17%.
Bapcor's Chief Executive Officer and Managing Director, Darryl Abotomey, commented: "We are very pleased with the start to the FY21 financial year, despite the impact of the government imposed restrictions. Our talented team members have worked hard under challenging circumstances and delivered an exceptional result for the quarter."
What is driving Bapcor's strong growth?
Management notes that the automotive aftermarket is a resilient industry and historically has performed strongly in difficult economic circumstances.
It feels that recent trading is another example of its resilience, which has been assisted by the increase in sales of second hand cars, reduction in use of public and shared transport modes, and government stimulus.
Outlook.
Pleasingly, the company expects the impacts of COVID-19, including the expected increase in domestic tourism and increased use of vehicles, to continue to drive its businesses.
In light of this, Bapcor is continuing to invest in its various businesses. This includes through information technology, marketing, process and system upgrades, and capital investment in facilities to increase its footprint and drive improved efficiencies.
And while these investments will increase its cost base, management expects it help underpin further profit growth in the future.
Looking ahead, it advised that it is expecting to report a strong first half result in February. However, it has warned that the second half remains unclear due to the current economic uncertainties and any potential government restrictions. As a result, it is not in a position to provide earnings guidance for the full year at this stage.
