The Carsales.com Ltd. (ASX:CAR) share price was trading 4.38% higher today following yesterday’s news release surrounding COVID-19.
For context, the broader Australian share market or S&P/ASX 200 (ASX: XJO) was trading at 5222, up 0.09%.
Carsales was founded in 1997, it’s the largest automotive, motorcycle and marine classifieds business in Australia. It is headquartered in Melbourne and employs more than 1,200 people around the world. The company has operations in the Asia Pacific region and has stakes in businesses in Brazil, South Korea, Malaysia, Indonesia and Thailand.
Carsales, as with many businesses, has had a massive spanner thrown in the works by the Coronavirus (COVID-19) outbreak. In Australia, between 10 March 2020 and 21 April 2020, Carsales.com has seen an average of 25% less lead volumes against the prior corresponding period (pcp). This has improved slightly since the Easter weekend.
Given the drop, Carsales has stood down 250 employees in Australia temporarily. These employees were mainly in external customer-facing roles where activity has been impacted by changes to customers’ operations from government restrictions and social distancing measures.
Carsales also explained it has waived all its fixed and variable advertising charges for the month of April and provided a 50% discount in May. Carsales has also deferred payment of April and May advertising invoices by 30 days. Carsales said the Board and Executive remuneration has been reduced by 20% from 1 April 2020 to 30 June 2020 as it deals with the current headaches that Coronavirus bring.
Carsales said it cannot provide clarity on specific financial guidance for FY20 due to the unpredictability in the current operating environment.
“Our overriding priority continues to be the safety and wellbeing of our employees and customers around the world in these challenging times.” Carsales’ CEO Cameron McIntyre said.
“We remain focused on managing short term performance while positioning the business to come out of the current environment in good shape.”
“Our market-leading position, strong customer proposition and diversification across geography and product supports our resilience and positions carsales’ well into the future.”
Where does the road lead for Carsales?
Carsales is a very strong business which has been affected by these unforeseen circumstances. As the Australian government loosen the restrictions on the public outings and people have a need to use cars again I believe things will get back on track for the business.
Although we have seen a good 4% jump early in today’s trading, the company’s share price is $2 lower than where it was this time last year. Might be worth adding to the watchlist.