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Carsales share price drives higher on AGM update

The Carsales.Com Ltd (ASX: CAR) share price has been amongst the best performers on the ASX 200 index on Friday.

In early afternoon trade the auto listings company’s shares are up a solid 4% to $15.56.

This latest gain means that Carsales’ shares are now up an impressive 44% since the start of the year.

Why is the Carsales share price pushing higher?

Investors have been buying Carsales’ shares today following the release of its annual general meeting update.

That update provided a breakdown on its performance on FY 2019 and its expectations for the new financial year.

In FY 2019 Carsales delivered a 7% increase in revenue to $210 million and a 3% lift in adjusted EBITDA to $131 million. This was regarded as a reasonably solid result given the tough trading conditions being experienced by auto retailers such as AP Eagers Ltd (ASX: APE) and Automotive Holdings.

Outlook.

The good news is that management appears confident that its performance will improve and believes Australian automotive market conditions are becoming more positive.

This is due to the positive impact of lower interest rates, an improved lending environment, a recovering housing market, and recent tax changes.

Management added: “We have seen a solid start to the year in Q1 in our Core Australian Dealer and Private businesses. In Display, we are anticipating an improving trajectory across FY20, albeit market conditions remain challenging in this segment. The underlying performance of our Data business has been solid excluding the continued exit of non-core low margin product and contracts. We also expect our domestic adjacent businesses of tyresales and Redbook Inspect to show good growth in FY20.”

In light of this, it anticipates group revenue, adjusted EBITDA and adjusted NPAT growth to be “solid” in FY 2020.

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Motley Fool contributor James Mickleboro 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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