CAR Group accelerates earnings as vehicle sales weather economic storm

A solid contribution from US-based listing business Trader Interactive, coupled with a strong performance in Australia, Brazil and Korea, has accelerated underlying earnings for carsales.com website operator CAR Group (ASX: CAR) by 63 per cent.

The Melbourne-based company has lifted reported EBITDA to $269.4 million in the first half of FY24, up from $164.9 million a year earlier as reported revenue shot 60 per cent higher to $530.7 million.

The latest result was boosted by the full impact of CAR Group’s $1.17 billion acquisition in 2022 of the 51 per cent stake in Trader Interactive that it did not already own.

However, CAR Group’s bottom-line result for the six months to the end of December was down 72 per cent to $117 million as the previous half was buoyed by a $333 million gain on the Trader Interactive deal.

Stripping that gain out of the statutory net profit result, CAR Group would have recorded a 40 per cent increase in net profit for the period.

The profit performance was also boosted by an increase in the group’s stake in Brazil’s Webmotors platform to 70 per cent during the year.

“With the completion of the acquisitions of Trader Interactive and Webmotors last year, we have accelerated our growth strategy and are executing on key strategic priorities across the group,” says CAR Group CEO Cameron McIntyre.

“Our Brazilian business, Webmotors delivered exceptional revenue and earnings growth in the first full six months of majority ownership.

“Our teams across the world are delivering on our purpose to make buying and selling vehicles a great experience, and I am incredibly proud of all of their achievements in delivering great outcomes for our customers and our shareholders.”

McIntyre says the half-year results reflect the ‘resilience’ of the business through economic cycles.

“We have achieved double-digit revenue and earnings growth in all of our key markets, demonstrating the strength of our business model as customers continue to prioritise our premium advertising products in a more challenging macro environment,” he says.

On a pro-forma basis, which gives a better perspective of the company’s performance that takes into account the acquisitions, group EBITDA rose 19 per cent to $277.2 million on an 18 per cent increase in revenue to $530.7 million.

Among the highlights for the period are the resilience of Australia’s automotive market despite inflationary pressures.

CAR Group says traffic and enquiry volumes on carsales.com.au in December were all tracking above the same time a year earlier.

“Car market conditions are positive for consumers looking for a car, with improved new car availability as well as a moderation in used vehicle pricing from COVID highs offering consumers more choice when it comes to their next vehicle purchase,” McIntyre says. 

CAR Group points to an ‘outstanding performance’ in Brazil following its move to majority ownership of Webmotors which saw revenue up 26 per cent and EBITDA up 29 per cent.

A solid result in Korea was driven by the expansion of the Guarantee Inspection and Encar Home Delivery products leading to the Asian division lifting revenue by 13 per cent and EBITDA by 11 per cent.

McIntyre says CAR Group has maintained ‘significant market leadership’ across its platforms.

“As the vehicle transaction process continues to become more digital, it provides us with great potential to deliver improved outcomes for our customers,” he says.

“In media, we are successfully leveraging new technology and IP across the group, which has resulted in an uplift in advertising viewability, yield and consumer experience.

“Our dynamic pricing engine has delivered higher private ad yields in both the US and Brazil following successful implementation in these markets.”

McIntyre notes that the addressable markets in which CAR Group operates are ‘large and under penetrated’.

“We are positive about the multiple levers that CAR Group has to deliver future growth.

“The excellent momentum we have built heading into the second half provides confidence in our ability to deliver another year of great results for our shareholders.”

 Car Group is paying an interim dividend of 34.5c per share, up from 28.5c previously.

Investors took the half-year result in their stride, marking down CAR Group shares by 47c, or 1.4 per cent, to $33 at 10.39am (AEDT).