AUSTRALIAN vehicle aftermarket company RPM Automotive Group has posted a record profit for the first half of the financial year, rising 16.2 per cent to $19.9m despite it calling the period “challenging”.

It said the results for the six months ended December 31, 2023 showed revenue was up 2.2 per cent to $56.9m on the positive results of the company’s diversified product offering and operational optimisation program and scale.

The financials showed flat operating expenses in the period, with EBITDA up 23.4 per cent to $5.4m, and strong operating cash flow benefiting from operational moves through the period including the acquisition of Chapel Corner Tyres that strengthened RPM’s wholesale tyre division.

RPM CEO Clive Finkelstein said that over the past six months the company had shown its ability to harness complementary divisions in more challenging trading conditions.

“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,” he said in a statement to the Australian Securities Exchange (ASX).

“By enhancing our operational efficiencies, diversifying our product offering, and leveraging data and analytics to drive further cross-selling, we have delivered results that are in-line with guidance, with improved profitability and operating cash flows.

“Our acquisition and integration strategy remains pivotal to our next phase of growth, 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.”

In his outlook, Mr Finkelstein said RPM was well positioned to navigate the dynamic landscape of the Australian automotive aftermarket.

He said it has “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, scheduled for rollout during 2H FY24,” he said.

“This builds on RPM’s established sustainable practices across its supply chain that ensure all materials in its tyre production process originate from ethically responsible sources.

“The company remains committed to seamless integration of acquisitions, optimising inventory management efficiency and exceptional on-going customer service.”

He said it now expects a stronger second half with group revenue to exceed $130m and EBITDA to be in the range of $11m to $13m in FY24. 

In the first half of this financial year, RPM’s Wheels and Tyres (wholesale tyres) division generated revenue of $20.2 million, up 10 per cent on the previous corresponding period, with this growth led by the acquisition of Chapel Corner Tyres.

Clive Finkelstein, RPM Automotive CEO

In addition, RPM said it was increased by offering customers a broader range of market-leading products and imported exclusive brands across passenger vehicle, truck and bus, and industrial applications. 

RPM’s Repairs and Roadside division performed consistently despite cost-of-living pressures, with revenue of $20.7m, down 9 per cent on pcp.

The company said that while revenue in the division was slightly lower, division gross profit and EBITDA improved “due to our optimisation and rationalisation program focusing on more profitable work.”

“Commercial tyre business continues to actively canvas new fleet businesses to grow the division and expand RPM’s national presence,” it said.

RPM’s Performance and Accessories improved its product range, expanded distribution, and entered new locations, delivering $12.9m in revenue in the half year.

“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,” it said in its ASX report.

“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.”

The company is still active in motorsport which has led to it being a leading destination for all soft parts and safety categories in motorsport through a broad range of brands (including RPM’s own range) at different price points. It delivered $4.5m in revenue, an increase of 6.4 per cent compared to H1 FY23.

During the half, RPM opened a new Revolution Racegear store in Gold Coast, the company’s biggest growth corridor, with many leading teams and drivers residing in the region.