On 26 October 2018, Carsales.com Limited (ASX: CAR) held its annual general meeting in which the company informed about the solid full-year result of FY 2018. Following this news, the share price of the company decreased by 0.244 percent as on 26 October 2018.
In FY 2018, the revenue of the company increased by 19 percent to $444.0 million as compared to the revenue of last year. The company witnessed a solid underlying growth in both the domestic segments of Online Advertising and Data, Research and Services driven by continued investment in new and enhanced product initiatives. The EBITDA of the company increased by 16 percent to $204.6 million as compared to the EBITDA of last year. EBITDA margin performance of the Finance segment was improved due to the increased sales of lower margin products, lower average volume bonuses, additional sales commissions on higher volumes and investment in people and technology. The adjusted NPAT of the company increased by 10 percent from $119.1 million in FY 2017 to $131.0 million in FY 2018. The company declared a final FY18 dividend of 23.7 cents per share which is an increase of 10% on FY 2017, reflecting confidence in the business with an 82% dividend payout ratio.
The total capital expenditure of the company increased by 68 percent to $20.3 million which reflects incremental costs for the implementation of new ERP & CRM systems. The capitalized labor costs increased by 27% against last year reflecting continued investment in technology platforms supporting international and adjacent market expansion. This year, the company added five new branches to the SK Encar network, which facilitates growth in inventory and inspection/certification revenues. The net debt of the company increased from $153 million in FY 2017 to $390 million in FY 2018 due to the additional debt which was used fund the SK Encar acquisition in FY18. Leverage ratio of the company remains prudent at 1.9x.
The company experienced solid growth in core dealer advertising products driven by both low single-digit lead volume growth and yield improvements. The revenues related to the company’s Finance and related services increased by 24 percent to $68.4 million in FY18 as compared to last year. The company is progressing well with its international expansion strategy with a significant increase in revenue and EBITDA contribution from the company’s international businesses. It is expected that the continued development of global technology will generate significant revenue growth over the coming years, particularly in our earlier stage investments in Argentina and Mexico.
In the first quarter of FY 2019, the performance of the domestic core business of the company remained solid with the exception of display advertising which has experienced disappointing trading to date. The company is expecting that the growth of revenue, EBITDA and NPAT will be moderate in the domestic core business, with earnings growth weighted towards the second half as display advertising performance is expected to improve.
CAR’s shares traded at $12.270 with a market capitalization of circa $3 billion as on 26 October 2018 (AEST 3:35 PM).
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