This ASX 200 stock is racing higher on big news

CAR Group Limited (ASX: CAR) shares are pushing higher on Tuesday morning.

At the time of writing, the ASX 200 stock is up 3.7% to $38.90.

This follows the release of an update from the auto listings company before the market open.

What did this ASX 200 stock announce?

This morning, the carsales.com.au owner announced that it has completed a strategic review and decided that it will be exiting its Australian Tyres business unit.

This business unit comprises both the wholesale division Tyreconnect and the e-commerce platform tyresales.com.au.

According to the release, the ASX 200 stock revealed that it made the decision following continued difficulty in achieving sustainable profitability in what is a highly competitive tyre retail and wholesale market.

The company notes that it has reached an agreement to sell certain assets of Tyreconnect to a third party with the sale expected to be completed at the end of February. However, the transaction is not going to be material to CAR Group.

The tyresales.com.au platform will not be sold. Instead, it will be closed effective today.

In light of this exit, the company revealed that its upcoming half year results release in February will be presented on a pro forma basis which excludes the Australian Tyres business unit. Though, its statutory results will include the business.

In addition, management notes that on a reported statutory basis, it expects to incur costs associated with the exit. This includes one-offs such as redundancy costs and asset write downs. Nevertheless, it does not expect these costs to be material and they will be treated as abnormal costs excluded from the pro forma and adjusted reporting results.

Following the exit of these business, the company owns digital marketplace businesses in Australia (carsales), South Korea (Encar), the United States (Trader Interactive), and Chile (chileautos). It also is the majority shareholder of webmotors in Brazil.

FY 2025 guidance

The ASX 200 stock has taken this opportunity to provide the market with an update on its guidance for FY 2025.

Management advised that growth is expected this year, but stopped short of providing any real figures. It said:

We expect to deliver good growth in Proforma Revenue, Proforma EBITDA and Adjusted NPAT on a constant currency basis. We also expect to see similar Group Proforma EBITDA margins in FY25 versus FY24.

In FY 2024, Car Group's pro forma revenue came in at $1,041 million, with EBITDA of $581 million and net profit after tax of $344 million. This means that it achieved a pro forma EBITDA margin of 55.8%.

The post This ASX 200 stock is racing higher on big news appeared first on The Motley Fool Australia.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Car Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2025