Carsales (ASX:CAR) share price on watch after reporting solid FY 2021 growth

Here’s how Carsales performed in FY 2021…

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The Carsales.Com Ltd (ASX: CAR) share price will be one to watch today.

This follows the release of the auto listings company’s full year results this morning.

Carsales share price on watch after FY 2021 results

  • Adjusted revenue up 4% to $438 million
  • Adjusted EBITDA up 10% to $254 million and reported EBITDA up 20% to $241 million
  • Adjusted net profit after tax up 11% to $153 million and reported profit up 9% to $131 million
  • Final dividend per share of 22.5 cents, down 10% year on year
  • Analyst consensus estimate was revenue of $427 million and EBITDA of $246 million

What happened in FY 2021 for Carsales?

For the 12 months ended 30 June, Carsales delivered double-digit growth across its adjusted EBITDA and net profit metrics. This was broadly in line with the market’s expectations, which could bode well for the Carsales share price today.

Management advised that this reflects a resilient revenue performance driven by a strong performance from its international businesses, modest growth in the Australian business, and strong margin performance. The latter was driven by cost management initiatives.

One slight disappointment that could weigh on the Carsales share price was its decision to cut its final dividend by 10% to 22.5 cents. This was despite the company reporting strong cash flow generation. Management explained that its dividend per share cut was driven by an increase in the number of shares on issue following the recent entitlement offer relating to the Trader Interactive acquisition

What did management say?

Carsales’ Group CEO, Cameron McIntyre, commented: “While the COVID-19 environment has been very challenging for carsales, we are proud of the way we have navigated the challenge. We acted decisively to protect our customers and employees which has left our business in a strong position.”

“We delivered the highest net profit growth this financial year since 2014, which is testament to the strength of our business model. Pleasingly, the accelerated digitisation in the automotive industry and changes in consumer behaviour are creating new growth opportunities for carsales, which positions us well for FY22 and beyond.”

What’s next for Carsales?

While no exact guidance has been provided for FY 2022, management remains positive on the future and is forecasting earnings growth.

Mr McIntyre said: “COVID-19 has driven accelerated migration to digital platforms across our global network of sites as evidenced by strong traffic growth. We are excited about our acquisition of Trader Interactive which will add to our enviable portfolio of International assets and provide a strong platform for future growth.”

“While current lockdowns and retail closures are having an impact on leads and private ad volumes, if our experience is consistent with prior lockdowns, the business is well placed to recover all or most of the declines once retail re-opens. On this basis we would expect to deliver solid growth in Group Adjusted revenue, Adjusted EBITDA and Adjusted NPAT in FY22. Depending on the duration and frequency of lock-downs in the first half, financial performance is likely to be more heavily weighted to the second half than usual,” he added.

The Carsales share price is up 13% in 2021.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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