Carsales accelerates post-pandemic profit rev up

Online vehicle retailing group Carsales has posted a record post-pandemic profit driven by continued traffic as consumers chase used vehicles.

Carsales chief executive Cameron McIntyre says the consolidation of Tradr would be the key priority of the year ahead. Picture: Stuart McEvoy.

There’s plenty of growth left in the tank at listed auto marketplace Carsales, after the Australian tech company posted a record $161m profit.

Traffic to Carsales’ sites drove the vehicle retailing platform to a 23 per cent jump in profits after it posted a $131m result in the 2021 financial year.

Carsales said the profit lift was due to “robust demand” across all key marketplaces, with demand for used vehicles remaining elevated.

Traffic to the Australian Carsales website was up 8 per cent, and remained “elevated versus pre-pandemic levels”.

A 24.5c final dividend was declared, taking total returns to shareholders for the year to 50c, higher than the 47.5c paid to shareholders in 2021.

Carsales chief executive Cameron McIntyre said the business was firing on all cylinders. He said supply chain restrictions had crimped sales of new vehicles, forcing many shoppers to look elsewhere.

But Mr McIntyre said the pending arrival of new cars to Australia presented a further opportunity for the platform as they would deliver increased trade-in and seller volumes.

Total revenues at the business were up 19 per cent in the past financial year, hitting $509m.

The retail group said it expected to deliver “very strong growth” in adjusted revenues and profits in the year ahead. Carsales also flagged it expected an expansion in its margins on both a pro forma and actual basis in the year ahead.

Mr McIntyre said Carsales would boost margins through “discipline” on labour and marketing costs in the year ahead as well as seeking to lift revenue. “We have the ability to flex in terms of the numbers of hires we’re doing and where those hires are coming from,” he said.

Online vehicle retailing group Carsales is registering continuous traffic as consumers chase used vehicles.

The latest results come as Carsales continues its push into broader markets. The Melbourne-based business has a presence in South Korea, the US, Chile, Mexico and Brazil. It recently secured a $1.2bn buyout of US-vehicle marketplace Tradr in a deal Carsales heralded as a “highly strategic acquisition with low double-digit EPS accretion expected in the first full year of ownership and further upside expected thereafter”.

Mr McIntyre said the acquisition of Tradr was a “natural evolution” of Carsales’ earlier 51 per cent stake in the business and showed the company’s intentions to push into “ large, attractive markets”.

The consolidation of Tradr would be the key priority of the year ahead. He said the purchase “brings further growth opportunities as well as increasing the diversification of our business across geography and customer segment”.

Carsales reported “excellent revenue” growth of 11 per cent in its US operation, supporting a 16 per cent lift in earnings.

South Korean revenues were up 17 per cent.

Shares rose 5.77 per cent to $22.90.