RPM Automotive Group Ltd (ASX:RPM) has delivered a record half-year ended December 31, 2021 - generating $34.4 million in revenue, up 73% from the previous corresponding period.
The company saw increased demand for commercial and wholesale passenger tyres, rebounds in repairs and roadside, and performance and accessories once trading conditions eased.
During the period, RPM continued to roll out its mid-term expansion strategy, with seven complementary businesses either acquired or integrated into the RPM Group.
Looking ahead, the company is well-placed to deliver strong growth in the second half of FY2022 and another potential record full-year result for the group.
“Strong growth”
Commenting on the record half-year performance, CEO Clive Finkelstein said: “The benefits of RPM’s customer acquisition and business integration strategy started to flow through in the first half.
“Our complementary businesses and brands, as well as successful cross-selling and servicing, have underpinned RPM Automotive Group’s strong growth across all financial metrics even through challenging operating conditions given COVID-19 impacts.
“While early in the half lockdowns occurred in major markets affecting some retail trading conditions, there was continued demand for RPM’s commercial tyres, accessories and repairs across essential service sectors including transport, mining and agriculture.
“Once trading opened up, our Repairs and Roadside, Motorsport and Performance and Accessories division turnover ramped up, underpinning a 73% increase in revenue to $34.4 million.”
Half-year results
Despite the effects of COVID-19, all four RPM divisions performed well, delivering strong growth in key metrics.
The revenue growth achieved, combined with operational optimisation and disciplined cost management, saw gross profit up 40% to $10.9 million, and EBITDA up 63% to $3.1 million.
Half-year results.
Strategic acquisitions
RPM continued to roll out its mid-term expansion strategy, with seven complementary businesses acquired or integrated into the RPM Group during H1 FY22:
- Opened RPM Autoparts distribution centres in Townsville (QLD) and Gippsland (VIC);
- Acquired Carline Store and Direct Wholesale Tyres in Far North Queensland;
- Completed acquisitions of Citic Autoparts (now RPM Autoparts), Elite Tyre Group and Super Tyre Mart; and
- Entered caravan and camper trailer sectors with acquisition of Safety Dave.
Finkelstein adds: “The successful integration of our recent acquisitions coupled with the addition of some new brands and product ranges, has strongly positioned the RPM Automotive Group for its next phase of growth.
“We had a very busy past six months executing satisfactory business outcomes and supporting our customers. We completed the acquisitions of Citic Autoparts (now RPM Autoparts), Elite Tyre Group and Super Tyre Mart. Carline Store and Direct Wholesale Tyres in Far North Queensland were acquired.
“We also opened RPM Autoparts distribution centres in Townsville [Queensland] and Gippsland [Victoria] to more efficiently support this broader footprint.
“This helped grow EBITDA by 63% to $3.1 million and increase Gross Profit by 40% to $10.9 million.”
“Towards the end of the half we also entered the caravan and camper trailer sectors with the announcement of our acquisition of Safety Dave, while expanding our wholesale product offering, with RPM becoming a secondary distributor of tier-1 car radial and truck & bus radial tyres. These will provide several cross-sell opportunities with other divisions."
Forward plan
The record results achieved during the H1 FY22, along with the successful execution of the company’s expansion strategy and increased cost management efficiencies, have RPM well placed to deliver strong growth in H2 FY22 and another record full-year result for the group.
Finkelstein adds: “RPM Automotive Group is on track to meet ambitious targets and expansion goals to serve more customers with more products via multiple distribution channels.
“Integrations of acquired businesses are proceeding well, and we recently significantly strengthened our management team to match our strong growth profile and use the funding we have available to support our acquisition growth strategy.
“With trading conditions starting to become less volatile, we have confidence in our ability to deliver on the strong growth expected over the remainder of FY22.
“RPM is strongly positioned to capitalise on the increased demand for automotive aftermarket products and services, and to grow into a leading Australian business operating well-known brands across the transport and automotive aftermarket sectors.”