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Tyres, inspections boost Carsales revenue

Petrina Berry  |  09 Aug 2017Text size  Decrease  Increase  |  

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BRISBANE - [AAP] Online classifieds business Carsales.com (ASX: CAR) says tyre sales and vehicle inspections have been the main drivers of its revenue growth.

The company's revenue rose 8 per cent to $372 million in the year to June 30, while net profit was steady due to one-off charges related to investments in its international business.

Revenue from private clients, which includes used car advertisements, rose 27 per cent in the year, while income from dealers grew 8 per cent, recently installed chief executive Cameron McIntyre said.

"The vast majority of that 27 per cent growth is coming from our high-growth adjacent businesses such as tyresales.com.au which is a pure-play tyre eCommerce business," he told AAP.

"We also have Redbook Inspect which does vehicle inspections for a lot of banks, Uber, dealers, private sellers and buyers of cars--that business is growing rapidly."

In January, the company lifted the price threshold for free advertising from cars worth under $3,000 to under $5,000, and increased costs for ads for cars worth more than $15,000.

Mr McIntyre, who replaced co-founder Greg Roebuck as chief executive in March, said Carsales lost some paid ad volume as a result but revenue benefited from an increase in clients choosing costlier premium ads.

He said Carsales was winning over sellers of cheaper cars who traditionally advertise with rival business Gumtree.

"Our inventory in cars under $5,000 is up substantially on where it was 12 months ago while our major competitor in that space, their inventory is down," Mr McIntyre said.

Among the items weighing on the company's full-year net profit was a $7.1 million impairment in iCar Asia, and adjusted net profit, which removes one-off charges, rose 8 per cent.

Assuming market conditions remain stable, revenue and profit growth will remain solid in the group's core domestic business in 2017/18, Mr McIntyre said.

Shares in Carsales initially dropped more than 2 per cent, but recovered to be up 32 cents, or 2.6 per cent, at $12.83 at 1525 AEST.

ADS TAKE A BACKSEAT TO TYRES, INSPECTIONS

* Full year net profit up 0.2pct to $109.5m

* Revenue up 8pct to $372.1m

* Final dividend up 2 cents to 21.5 cents, fully franked

 

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