National Tyre & Wheel's 1H24 performance and Dunlop distribution plans

National Tyre & Wheel Limited (ASX: $NTD) has reported its financial results for the half-year ended 31 December 2023. The company achieved an operating EBITDA of $19.7 million, showing improvement from the challenging operating conditions in the previous fiscal year. Despite increased financing costs due to higher interest rates, the company's gross profit margins improved in 1H24 as prices realigned with cost of goods sold (COGS) and inbound freight costs declined. National Tyre & Wheel also outlined its plans for the distribution of Dunlop, an iconic Australian brand, which is expected to add $85-95 million in revenue per annum.

Executive commentary on 1H24 performance and Dunlop distribution strategy

The company's 1H24 results reflect a more favorable operating environment and successful project execution. We are pleased to see the improvement in our operating EBITDA and gross profit margins, despite the challenges posed by inflation and wage rises. Our decision to discontinue certain low-margin brands and rationalize retail businesses has contributed to the improved performance. Additionally, the upcoming distribution of Dunlop is a significant strategic move for us, and we are confident that it will further strengthen our position in the market and contribute to our revenue growth.

Summary of 1H24 results and outlook for National Tyre & Wheel

National Tyre & Wheel's 1H24 results demonstrate a positive turnaround from the difficulties faced in the previous fiscal year. The company's focus on improving gross profit margins and reducing expenses has yielded favorable outcomes, reflected in the improved operating EBITDA and EBIT. The announcement of the upcoming distribution of Dunlop is a key highlight, with the company expecting it to add substantial revenue. Looking ahead, National Tyre & Wheel aims to complete ongoing projects and launch Dunlop in the fourth quarter of 2024, which is anticipated to drive steady business growth. The company is actively managing costs and remains optimistic about the opportunities presented by the Dunlop Distribution Agreement and the growth of its commercial tyre business. While specific guidance for 2H24 is not provided, the company's initiatives are geared towards enhancing its financial performance in FY25.