Investors are snapping up shares in Carsales.com after the online vehicle classifieds giant boosted its dividend and forecast continued underlying earnings growth.
Outgoing chief executive Greg Roebuck said the performance of the group's core operations was "robust" in the first half of the financial year, thanks largely to its Australian and Asian businesses.
"The carsales business has again delivered a strong performance driven by solid domestic and promising international growth," he said.
Carsales.com's half year underlying profit rose five per cent from a year earlier to $54.4 million, and its interim dividend was lifted by five per cent.
The group said it has made a good start to the second half of the financial year, with January once again proving to be an attractive month for car buyers in the local market.
It expects growth in earnings before interest, tax, depreciation and amortisation (EBITDA) and underlying profit to remain "solid" in its domestic core business.
The performance of its vehicle financing business, in which revenue fell 22 per cent in the first half of 2016/17, is also expected to improve in the six months to June 30.
The business was hurt by by "significant" volume reductions at lender BMW Finance, which in December agreed to pay remediation worth a total of $77 million after the corporate regulator found thousands of customers may have been unfairly hit by its lending and debt collection practices.
Carsales.com's half year net profit dropped eight per cent to $47.2 million, mainly due to a writedown in the value of its investment in iCar Asia.
Bell Direct equities analyst Julia Lee said investors were concerned about the group's performance ahead of its results announcement, but were reassured by its underlying performance.
"Given the low expectations coming into this result, we're seeing the share price pop today," she said.
Carsales.com shares gained 78 cents, or 7.8 per cent, to $10.83.
CARSALES.COM DELIVERS UNDERLYING GROWTH
* Half year net profit down 8pct to $47.2m
* Revenue up 7pct to $178.6m
* Interim dividend up 0.9 cents to 18.7 cents, fully franked
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