Carsales share price zooms higher on coronavirus update

The Carsales.Com Ltd (ASX:CAR) share price is zooming higher on Friday after releasing an update on its coronavirus impact…

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The Carsales.Com Ltd (ASX: CAR) share price looks set to finish the week in style.

In afternoon trade the auto listings company’s shares are up an impressive 7% to $12.52.

Why is the Carsales share price zooming higher?

Investors have been buying Carsales shares this afternoon after the release of an update in relation to the impact of COVID-19 on its business.

According to the release, the company notes that over the past few weeks there has been a steady escalation in the impact of COVID-19 in Australia.

In light of this, management believes it is no longer possible to predict the impact on the buying and selling activity on the Carsales platform in Australia.

Pleasingly, its international businesses currently remain resilient during the challenging global environment.

The company advised that its Korean business is delivering robust operational metrics which is supporting continued solid growth in revenue and earnings. It is a similar story in Brazil, with good operational metrics reinforcing continued strong growth in revenue and earnings.

However, due to the importance of its Australian operations and the uncertainty in this key market, management feels it is appropriate to withdraw its guidance.

That guidance, which was issued with its half year results, was for solid growth in group revenue, adjusted EBITDA, and adjusted NPAT in FY 2020.

Management commentary.

Carsales CEO, Cameron McIntyre, commented: “With the continuing spread of COVID-19, our overriding priority is the safety and wellbeing of our employees and customers in these difficult times. We have a strong plan in place to reduce exposure to our employees and we have strong business continuity measures in place.”

“As a business, we had good momentum prior to the impact of COVID-19 and we are confident in the underlying performance and resilience of our business model. We have a strong balance sheet and prudent gearing, which positions us well to deal with this challenging environment,” he concluded.

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