Investing.com– Shares in CAR Group Ltd (ASX:) rose on Tuesday after the company announced its decision to exit its Australian Tires business unit, a move aimed at improving overall profitability and streamlining the business.
The decision follows a strategic review, with the company citing difficulties in achieving sustainable profits in the competitive retail and wholesale tire markets. CAR Group has agreed to sell certain assets of its wholesale division, Tyreconnect, to a third party by the end of February, while its e-commerce platform, tyresales.com.au, will close with immediate effect.
CAR shares rose nearly 4% to A$38.95.
Investors reacted positively, seeing the exit as a step towards better financial clarity. CAR Group reiterated its guidance for FY25 on a pro forma basis, excluding the tire business, forecasting growth in revenue, EBITDA and net profit after tax (NPAT). The company expects EBITDA margins to remain flat compared to FY24.
CAR Group noted that the exit would generate some intangible costs, including layoffs and asset write-downs, but these would be classified as abnormal and excluded from adjusted financial reporting.
