Vehicle digital marketplace operator CAR Group has forecast higher revenue and earnings for the 2025 financial year (FY25) and announced it is shutting the door on its Australian Tyres business unit.
Car Group, formerly known as Carsales.com, said it expected to deliver good growth in proforma revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) and adjusted net profit after tax (NPAT) on a constant currency basis in FY25.
The company, which has counted media groups News Corp and Nine Entertainment as shareholders in the past, said it expected to see similar group proforma EBITDA margins in FY25 versus FY24.
Car Group said it had decided to “exit” the Australian Tyres unit, comprising wholesale division tyreconnect and the e-commerce platform tyresales.com.au, due to problems in sustaining profitability in a highly competitive tyre retail and wholesale market.
It had reached an agreement to sell some assets of tyreconnect to an unnamed third party by end of February.
News Corp owned a stake in Carsales.com between 2005 and 2016 which was diluted from an initial 49.9% on acquisition to 41% when the company went public in 2009, with the reminder of the stake sold for about $350 million.
Nine Entertainment sold its 49% stake in 2011.
E&P Financial Group Executive Director Media and Telco Entcho Raykovski said although the sale price had not been disclosed, it was expected to be minimal given the tyres business was effectively break-even at the EBITDA level.
“In our view, the sale is a sound strategic move, with Tyres unlikely to be a meaningful contributor to earnings and likely requiring greater scale to achieve profitability,” Raykovski said in a research note.
At 12.30pm (1.30am GMT) CAR (ASX: CAR) shares had risen to 98 cents or 2.6% to A$38.48, capitalising the company at $14.53 billion, having traded between $37.79 and $38.95.