LA Private

GUD expects underlying earnings to be on track

Two days before its investor day on Wednesday, GUD (ASX:GUD) stated that its expected underlying earnings are on track, though its dominant automotive operation will fall a little short due to weakness across the Tasman and in some parts of the sector in Australia.

The company appears to be battling similar headwinds to those encountered by automotive retailers like Bapcor and Supercheap Auto (Super Retail Group).

Bapcor has been hit harder than either Supercheap or GUD’s car businesses.

In a statement to the ASX late Monday after trading had ended for the session, GUD confirmed that Group FY24 underlying EBITA is in line with expectations and is forecast to be at least $193.5 million – underlying EBITA was $191.1 million in 2022-23, so the improvement is marginal.

“Automotive (excluding APG – the former Auto Pacific Group) continues to trade well across all its key business units, reflecting ongoing execution of the diversification strategy and resilience of the aftermarket. End-user workshop demand remains positive,” the company said in the late afternoon filing.

“APG is expected to deliver approximately $63 million in underlying EBITA (pre-corporate overheads), which is approximately $3 million below GUD’s expectation at the time of the FY24 H1 result.”

GUD said this dip was being driven by a weaker recovery in NZ, which is taking longer than expected (NZ is marginally above breakeven to date in FY24 and is approximately $10 million in EBITA (on an annualized basis) below APG’s business case assumptions).

“The impact of lower Toyota volumes (with lower volumes in the second half than the first half and related manufacturing recoveries).

“Emerging consumer-related softness in the trailering market (non-Cruisemaster). Encouragingly, Cruisemaster is flat versus FY23, despite a weak caravan market, reflecting market share gains.

GUD says it is forecasting further revenue and EBITA growth in APG in FY25 “as headwinds partially moderate and new business wins begin to contribute.”

On top of this, GUD says its corporate costs, cash conversion, and leverage (Net Debt/Adj.EBITDA2) are tracking in line with expectations.

“GUD’s full-year results expectations are based on April 2024 unaudited management estimates and are subject to a continuation of current trading conditions and other factors during the remainder of the 2024 financial year,” the company said.