G.U.D. Holdings stocks are up on ASX; Here’s why.

Key Highlights:

• G.U.D. Holdings shares grew following the release of solid 1H FY2023 results.
• The Company witnessed strong growth in revenue and net profit.
• G.U.D's outlook is positive. APG and Automotive (ex APG) are expected to be positive in 2H FY2023.

ASX-listed G.U.D. Holdings Limited (ASX: GUD) shares moved up following the release of its 1H FY2023 results.

G.U.D. Holdings Limited is a distributor of automotive filtration and other service parts, locking systems and other security products, water pumps, pool equipment and related equipment, industrial and commercial storage products and systems, electrical appliances, and cleaning products.

The growth in the Company's shares was driven by its strong 1H FY2023 results. Let’s take a quick glance at the financial results:

• Revenue increased by AU$184.991 million to AU$517.017 million. Compared to 1H FY2022, the revenue increased by 55.7%.
• Reported net profit from operations for the period attributable to members grew by AU$21.452 million to AU$45.627 million.
• Underlying profit from operations after tax attributable to members was up AU$13,624 to AU$48.857 million.
• The Company declared an interim dividend of AU 17 cents.

Group Trading Performance:

The Company reported strong growth in the revenue numbers, as already pointed out above. The revenue growth was driven mainly because of acquisitions. Organic revenue increased 2% on the pcp, showcasing the weak export sales of Davey. Organic growth, apart from Davey was 6%. The Group reported Statutory NPAT was of AU$45.6 million. It includes AU$9.7 million of additional amortisation of acquired intangibles and APG acquisition-related inventory step-up of AU$3.5 million and AU$1.1 million of restructuring costs.

Segment Performance:

The Automotive (ex APG) business revenue improved by 17.8%, mainly driven by the acquisition of Vision X, which contributed an additional 5 months of revenue in H1 FY2023. Underlying EBITA was AU$67.9 million, increased 10.7% on the pcp driven by acquisitions as well as organic growth. Automotive margins declined 1.3 percentage points. The lower production throughput of the G4CVA manufacturing businesses impacted the margins. This segment continues to be constrained by a severe shortage of skilled trades.

January Trading Update:

In January 2023, APG sales were strong compared to the previous corresponding period. In February, the sales started positively. While Q3 OEM purchase orders are still constrained due to component supply constraints, orders are consistent with the plan. Q1 and Q2 trends have continued into Q3.

There was a strong demand in trailing businesses in January 2023 for Cruisemaster suspension sets. 'Core' Automotive sales in January 2023 were up compared to January 2022, in spite of some resellers replenishing inventory at a lower rate than store sales. Sales momentum improved in February 2023.

Davey experienced solid revenue growth in January.

Outlook:

The Company's outlook is positive. The Company is confident in APG's ability to deliver its business case targets as OEM supply normalises. APG is well placed to capitalise on unmet demand and market share chances as competitors struggle with operational challenges. It is on track to deliver ~55% of FY2023 underlying EBITA in H2, consistent with the plan.

Other than this, the Company expects its auto aftermarket to remain robust in 2H FY2023. The Company believes that its growing portfolio is in a robust position to continue to leverage domestic momentum.

The Company expects further disciplined investment planned in the second half of FY2023 to capitalise on the medium-term organic opportunities presented by the prospective offshore markets. The Company stated that margins will be managed in response to inflationary pressures.

Stock Information:

At AEDT 3:04 PM, GUD shares are trading at AU$9.090, up 9.915% from the previous close.

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