Car Group share price falls despite 32% first-half earnings jump

The CAR Group Limited (ASX: CAR) share price is edging lower on Monday morning.

In early trade, the auto listings company’s shares are down 0.5% to $33.31.

This follows the release of the company’s half-year results.

CAR Group share price falls on results

Here’s a summary of how the company performed during the first half compared to the prior corresponding period:

• Adjusted revenue up 60% to $531 million
• Adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) up 56% to $277 million
• Adjusted net profit after tax up 34% to $163 million
• Reported net profit down 72% to $117 million
• Partially franked interim dividend up 21% to 34.5 cents

What happened during the half?

For the six months ended 31 December, Car Group reported a 60% jump in revenue to $531 million. This was driven by double-digit revenue growth in all key markets through strong execution of its strategy.

In addition, the company’s results were boosted by transformative acquisitions in the US and Brazil made in the last financial year.

And given the more complex macroeconomic environment the company was operating in, management believes it demonstrates the strength and resilience of the group’s diversified business model and the value it provides to its customers.

It also believes it highlights the significant long term growth opportunity in the group’s large and under penetrated markets.

On the bottom line, Car Group’s adjusted net profit after tax was up 34% to $163 million and its reported net profit was down 72% to $117 million. The latter reflects the recognition of a $333 million gain on acquisition of Trader Interactive in the previous year.

How does this compare to expectations?

While strong on paper, Car Group’s results was largely in line with expectations and likely already priced in. This may explain why its share price is having a subdued session.

Goldman Sachs commented:

CAR reported a 1H24 result in-line with GSe with 1H24 Sales/EBITDA/NPAT growing +60%/+56%/+34% (incl. acquisitions) vs. pcp to A$531mn/A$277mn/A$163mn, which was +2%/+0%/+0% vs. GSe, with strength in Australia (particularly media) and Korea.

Management commentary

CAR Group’s CEO, Cameron McIntyre, was pleased with the half. He commented:

CAR Group has had an excellent first half of the financial year. With the completion of the acquisitions of Trader Interactive and webmotors last year, we have accelerated our growth strategy and are executing on key strategic priorities across the group. Our Brazilian business, webmotors delivered exceptional revenue and earnings growth in the first full six months of majority ownership.

Our financial results reflect the significant progress that has been made in delivering on our key strategic priorities and the resilience of our business through economic cycles. We have achieved double digit revenue and earnings growth in all of our key markets, demonstrating the strength of our business model as customers continue to prioritise our premium advertising products in a more challenging macro environment.

Outlook

While no firm guidance was given for the full year, management has laid out its expectations.

On a pro forma basis, it expects “to deliver good growth in Revenue and EBITDA in FY24.”

Whereas on an actual basis, it is expecting “very strong growth in Revenue and Adjusted EBITDA and strong growth in Adjusted NPAT in FY24.”

Positively, it also expects “to see expansion in the CAR Group EBITDA margin on a proforma basis in FY24.”

The Car Group share price is up 48% over the last 12 months.

The post Car Group share price falls despite 32% first-half earnings jump appeared first on The Motley Fool Australia.

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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 positions in and has recommended Goldman Sachs Group. The Motley Fool Australia has recommended Car Group. 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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