Carsales.com Releases Unaudited FY20 Results Estimate
Vehicle sales during the COVID-19 pandemic have shifted from new cars towards second-hand late-model used cars. This follows a 35 per cent drop in sales in May, following a 49 per cent drop in April. This macroeconomic environment has been reflected in the performance of Carsales.com (ASX: CAR), with a withdrawal of their company’s FY20 financial guidance, and a release of new figures on 17th June.
The pandemic has affected CAR through a decrease in lead volumes, inventory increases, the increased website traffic and financial restructuring. Board and Executive pay were cut by 20 per cent from 1st April to 30th June. This measure was coupled with a temporary furloughing of around 250 employees, of whom were customer-facing.
Discretionary spending on outdoor brand marketing was also reduced. Between March and April, lead volumes were down 25 per cent compared to prior corresponding periods (PCP) yet have now bounced back comparable to 2019 levels. Increase in inventory has been deemed to be due to dealers listing all available inventory yet has now declined as the macro environment starts to normalise.
As of 17th June, CAR has released an update with new FY20 estimates. Many figures have been adjusted to include around AUD26 million of revenue billed, but not collected due to COVID-19 support packages. Thus, revenue in 2019 brought in AUD418 million, with adjusted projected figures sitting between AUD419 and AUD423 million, a 0 to 1 per cent growth. Without COVID-19 support packages, a negative trajectory is projected to be between AUD393 to AUD397 million, which is a loss of 5 to 6 per cent.
Looking towards the financial aspects of the firm, earnings before interest, taxes, depreciation, and amortisation (EBITDA) was adjusted to sit at AUD218 million in 2019 with 2020's earnings estimated to be between AUD228 and AUD232 million, an increase of 5 to 6 per cent. However, the reported EBITDA for 2019 was AUD213 million and this figure is expected to decrease to AUD199 and AUD203 million, representing a 5 to 7 per cent decrease.
Finally looking at net profit after tax (NPATA), 2019 adjusted NPATA was AUD130 million, with a growth expectation between AUD134 to AUD138 million, or a 3 to 6 per cent increase. Reported NPATA in 2019 was AUD132 million. CAR projects a decrease to AUD120 to AUD124 million, or a 6 to 9 per cent decrease in growth. All of these figures are currently unaudited and will be subject to change during the end of financial year audit process.
CAR’s stock price has seen a steady increase in value since the worst of the pandemic outbreak. With a steadily increasing net operating cashflow, the company is equipped to weather the uncertain environment. Normal dealings have resumed with the exception of new cars which attract a 100 per cent dealership discount, of which are making up the COVID-19 AUD26 million support packages.
By Caroline Wong
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