Repco boss back as NZ market toughens

Repco's former New Zealand boss, Geoff Taylor, is back in the top job, three months after the auto parts company cited New Zealand trading conditions in a profit warning.

Taylor replaced general manager Phil Pritchard, who confirmed he had resigned effective July 6, but had no further comment.

Taylor told the Business Herald that the changeover had nothing to do with the company's April profit warning.

Repco had said earnings were likely to be at the lower end of its forecast range due to tougher-than-expected trading conditions. It had previously forecast a trading profit of between A$82 million ($91 million) and A$85 million for the year ended June 30, up from A$71.2 million from the 2004 financial year.

Taylor said a number of businesses would have been happy with Repco's year-on-year numbers.

"It depends on what you call tougher conditions. At the end of the day, there were higher expectations."

But a tough market could also work for Repco if it dampened new-car sales and led to an ageing of the fleet.

"Sometimes we tend to be a little exempt from the peaks and troughs."

Repco primarily sells car parts to the trade but also through retail outlets. In an investor presentation in April, managing director Peter Mummery said Australian retail sales were strong but they were "more competitive" in New Zealand.

Analysts said the company had faced stronger competition than anticipated in New Zealand, particularly from Super Cheap Auto.

"Super Cheap came in so quick and cheap - that's their problem," said one analyst.

Another said a Repco management change was "no surprise" given the April warning.

David Spry, an Australian analyst with brokerage F.W. Holst, said it was possible Repco had made changes to counteract the conditions.

"Maybe they see the New Zealand business needs a little bit of impetus, particularly given the environment is not as favourable."

But Spry said the profit downgrade had not been that significant, with the profit remaining within the forecast range.

"It didn't seem to me the New Zealand business was particularly bad. It was just maybe the company's expectations were high."

Taylor has been with Repco for 18 years, and was part of the team who took the company through a management buyout before its float.

Pritchard has been general manager of Repco New Zealand for 2 1/2 years, and the management team has recently been bolstered by operations manager Colin Daly and head of automotive merchandise Paul Flay.

Spry said having the business in an experienced pair of hands could be a positive - "someone who knows the business, and had it firing well before ... if there are niggling problems, they'll sort them out".

He believed it was unlikely Taylor would face a market that would turn totally sour. With New Zealand employment at levels not seen since World War II, "you're hardly going to get a retail environment with no growth".

The parts provider

* Repco is Australasia's largest independent supplier of automotive after-market parts, accessories and tools.

* It has annual turnover in excess of $850 million.

* The company has more than 430 stores in Australia and New Zealand.

* It is more than twice the size of its nearest competitor.

* Repco listed on the Australian and New Zealand exchanges in 2003.