Shares of Carsales.Com Ltd (ASX: CAR) shifted into reverse today following the release of the group's earnings results for the year ended 30 June 2015. The stock fell as much as 6.5% and a hit a low of $10.07, compared to a 0.3% decline for the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).
So What: Although it cited a "year full of challenges for the Australian economy", the group, which owns and operates Australia's largest online automotive classifieds business, managed to post a record result for the 2015 financial year.
During the period, revenues rose 32% compared to the 2014 financial year (FY14) to $311.8 million, while earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 12% to $154.3 million. Ultimately, the group reported a net profit after tax (NPAT) of $103.2 million, up 11.3% on FY14.
Much of the sales growth came from the group's "Finance and Related Services" segment, consisting of 50.1% of the Stratton Finance business that Carsales.Com acquired in July 2014. The business, which provides innovative vehicle finance arrangements (amongst other related services), contributed $59.4 million of revenue, without which group revenue would have only grown at 7% year-on-year.
Revenue from "Online Advertising", which is the company's core business, grew by just 6.2%, while EBITDA from the segment gained just 1.5%. It said that 1.1 million new cars had been sold domestically during the 2014 calendar year with that number set to be exceeded in 2015.
Meanwhile, EBITDA contracted in Carsales.Com's 'International' and 'Data and Research' segments. The group's overall EBITDA margin fell from 59% in FY14 to just 50% as at 30 June 2015, which could play on the market's sentiment. This was impacted by the acquisition of Stratton Finance.
Dividend investors were however given a reason to smile with the company declaring a special once-off dividend. Management announced a fully franked final dividend of 19.1 cents, comprising of 17.7 cents per share plus a special dividend of 1.4 cents per share, which represents a 10% increase on the prior corresponding period.
Now What: Carsales.Com is committed to strengthening its already dominant position in its core Australian market, while it is also looking for new services, both locally and internationally, to enhance shareholder value.
For instance, it recently acquired 65% of Mexican Auto classified site, SoloAutos, while it also owns a 20.2% stake in the Asia-focused iCar Asia Ltd (ASX: ICQ); a 49.9% stake in South Korea's SK ENCARSALES.COM Ltd and a 30% stake in Brazil's Webmotors S.A.
The company reported: "We continue to closely monitor our performance and market conditions. Domestic trading conditions in the first 6 weeks of FY16 have remained solid. We expect to see further growth from domestic investments and EBITDA margins to be maintained around current levels. Subject to international market conditions being maintained we would expect to see solid improvement in the earnings of our international investments."
Although the market was clearly not impressed by today's results announcement, long-term investors could look to take advantage of the discounted price to build a position in the stock.
