CARSALES has posted a record half-year result on rising revenues from international operations and a strong Australian used-car market.

Carsales.com Limited this week reported a five per cent revenue increase to $214 million and a profit of $71 million, up 22 per cent, in the first half of the current financial year, leading to a lift in the interim dividend to 22 cents a share from 20.5c/share in the corresponding period in 2019.

In its report to the Australian Securities Exchange, Carsales said: “Whilst the new-car market in Australia remained subdued, good levels of demand in the used-car market drove continued growth for the Australian business.

“Solid traffic growth on carsales.com.au throughout the half was a key driver in supporting the increase in used-car lead volumes enjoyed by dealer and private customers.

“The International portfolio generated excellent revenue growth. South Korea in particular delivered a standout performance, with underlying local currency revenue growth of 13 per cent.”

Carsales group CEO Cameron McIntyre said it was pleasing to deliver another record half-year result “despite the impact of a challenging domestic new-car market here in Australia”.

“Our performance demonstrates the benefit of the diversification we have in our Australian business and the growing significance of our International portfolio,” he said in the ASX statement.

“Revenue growth, earnings growth and margin expansion point to good progress and momentum in the business and the resilience of our business model.

“Our international growth strategy is delivering. We have an enviable portfolio of international assets, which are key pillars of our long-term growth agenda.

“Our two largest international assets in Korea and Brazil continue to demonstrate impressive growth profiles and both have significant future upside potential.”

Mr McIntyre highlighted the October launch of its partnership with Viva Energy and Shell Coles Express as reflecting the use of innovation to deliver value and drive engagement with its members.

The partnership provided Carsales members with a fuel discount and Mr McIntyre said this initiative resulted in a significant uplift in both the size and engagement of members “and will allow Carsales to provide more personalised and contextual offers for its members across the car ownership lifecycle”.

In the past half year, Carsales.com showed a six per cent increase in dealer revenue growth that the company said reflected healthy demand for used cars.

It also had a five per cent revenue growth in its data, research and services sector, with notable growth in Redbook and its warranty product.

Private business showed a seven per cent increase in revenue driven by growth in private advertisement revenue that was “underpinned by increasing penetration of our Instant Offer product”.

Mr McIntyre said that while the Carsales.com business was significantly weighted towards the used-car market, “we have been focused on driving opportunities for our dealer partners to support their new-car offering”.

“We hosted our inaugural new-car sale event in November, with compelling offers on more than 20,000 new and demonstrator vehicles across 14 brands,” he said.

“The event helped to stimulate demand in an otherwise subdued market.”

Carsales has also developed a product that enables dealers to advertise their consumer finance offerings as an integrated option with their listings.

Mr McIntyre said this product has excellent potential to increase overall finance penetration rates, as it will enable dealers to raise awareness of their native finance offering earlier in the sale process.

During the half, Carsales agreed to sell its 50.1 per cent stake in Stratton Finance to a third party. The sale also triggered the separation and sale of Stratton’s 8.3 per cent direct interest in RateSetter to its shareholders, which resulted in a non-cash gain.

The company reported that the net impact of the Stratton sale is a $2.7 million gain. The sale is expected to be completed by June 2020.

For the outlook, Mr McIntyre said the company anticipates group revenue, adjusted EBITDA and adjusted net profit after tax to be solid this financial year.

“Domestic business performance in January has remained solid, with the exception of display advertising,” he said.

“In display, we anticipate a similar run rate in the second half to that achieved in the first half subject to no further deterioration in advertising market conditions.

“In Korea, we expect continued good growth in revenue and earnings. In Brazil, we expect continued strong growth in revenue and earnings. In the remainder of our Latin American businesses we expect similar growth rates to those achieved in the first half.”

By Neil Dowling