Carsales.Com Ltd Profits Go Zoom-Zoom, Share Price Goes Putt-Putt

Carsales.Com Ltd (ASX:CAR) shares rose 1% this morning after the company announced strong profit results.

Online vehicle sales website, Carsales.Com Ltd (ASX:CAR), released its half-year results to the ASX this morning. Revenues grew 12% to $200 million, and adjusted net profit after tax (NPAT) grew 11% to $60 million. Carsales management reported growth in all of its business lines, including the international division.

The international businesses – Mexico, Argentina, Chile, South Korea, and Brazil – remain small and contributed only 3% of company revenue. Carsales said it continues to invest in these areas, and recently acquired the remaining 50% of SK Encar (the South Korea business).

In Australia, Carsales’ largest contributor to revenue is its dealer revenue, which involves paid advertising from car dealerships. This business grew a modest 7% to $69 million, although the smaller private seller and Finance & Related Services businesses grew around 20% to $35.8 million and $32.1 million respectively.

Carsales’ operating costs continue to increase due to “faster growth of lower margin adjacencies (such as tyres, inspections) and investment in these businesses to support future scalable growth.” 

In English, this means that Carsales’ other businesses are more labour and cost-intensive than its core website, so as these other businesses grow, costs will rise. Net debt also increased, from $153.2 million to $174.1 million.

The Carsales share price was up 1% to $14.54 at the time of writing.

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