Car Group shares lift on tyre exit
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More news: Car Group shares gained in morning trade after the vehicles marketplace announced the sale of its tyres business to an unnamed third party.
Car Group shares were up 3.4% to $38.79 by 11am AEDT.
E&P Capital analyst Entcho Raykovski called the sale "a sound strategic move, with Tyres unlikely to be a meaningful contributor to earnings and likely requiring greater scale to achieve profitability".
Car Group to exit tyre arm, reiterates FY25 outlook
The news: Carsales owner Car Group will exit its Australian tyre businesses, due to "continued difficulty in achieving sustainable profitability" in both the retail and wholesale market.
The context: Car Group said that following a strategic review, it reached an agreement to sell certain assets of its wholesale division, tyreconnect, to a third party, with the sale expected to be completed at the end of February.
The company will also close its e-commerce platform, tyresales.com.au, effective from today.
Car Group expects costs associated with the exit to include redundancy costs and asset write downs, though these will not be material to the company's result.
It expects to deliver "good growth" in proforma revenue, proforma EBITDA and adjusted NPAT in FY25 compared to FY24. The company expects to see similar group proforma EBITDA margins versus last year.
The sources: ASX announcement, E&P Capital research
