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Results: Carsales share price surges 12% on earnings

The Carsales.Com Ltd (ASX: CAR) share price has risen strongly today after the company released its results for the 2019 financial year (FY19) this morning. CAR shares closed yesterday at $14, but are now trading for $15.82 at the time of reporting – a rise of 12.68%

What were the carsales numbers like?

carsales reported a positive set of results this morning. Here are some of the highlights:

  • Revenue up 11% to $418 million
  • Earnings (EBITDA) up 7% to $210 million
  • Net profit after tax (NPAT) up 3% to $131 million
  • Revenue from international businesses up 39% and earnings up 29% compared to FY18
  • carsales Asia revenue up from $29.7 million in FY18 to $65.1 million in FY19 – an increase of 119%
  • Final dividend of 25 cents per share – a 5% increase on FY18’s final dividend
  • Total dividends for FY19 at 45.5 cents per share – a 3% increase from FY18
  • Compound annual growth rate (CAGR) over five years sits at 13% for revenue, 10% for earnings, and 8% for NPAT.

carsales continues to dominate in the Australian marketplace, with a 1.55x lead over its nearest competitor (up from 1.51x in FY18). Also of note is the fact that, despite a record fall in number of vehicles sold in Australia in FY19, carsales has still managed to increase revenue by 11%. Through its subsidiaries, the company also has the lead market position in South Korea, Argentina, Brazil, Chile and Mexico.

Outlook

carsales has indicated it expects the commercial environment in Australia to improve in FY20 due to low interest rates, recovering property prices and the tax changes that were implemented by the Morrison government this year. The company is also optimistic of robust growth in the domestic Tyresales business as well as RedBook Inspect. Looking overseas, carsales expects growth rates to continue on a similar trajectory for the Korean and Brazilian markets and has indicated it is also expecting “improving profitability” in the Chilean, Mexican and Argentinian businesses.

CEO Cameron McIntyre was very satisfied with the company’s results, stating:

We are very pleased with the company’s performance and our ability to respond to challenging market conditions in order to deliver continued growth while investing for the long term. This result is testament to the strength, resilience and diversified nature of our business, as well as our investment in new products and entry into new markets.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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