Investing.com– Shares of CAR Group Ltd (ASX:CAR) climbed on Tuesday after the company announced its decision to exit the Australian Tyres business unit, a move aimed at improving overall profitability and streamlining operations.
The decision follows a strategic review, with the company citing difficulty in achieving sustainable profits in the competitive tyre retail and wholesale markets. CAR Group has agreed to sell certain assets of its wholesale division, Tyreconnect, to a third party by February’s end, while its e-commerce platform, tyresales.com.au, will shut down immediately.
CAR shares rose nearly 4% to A$38.95.
Investors responded positively, viewing the exit as a step toward better financial clarity. CAR Group reiterated its FY25 guidance on a proforma basis, excluding the Tyres business, projecting growth in revenue, EBITDA, and net profit after tax (NPAT). The company expects EBITDA margins to remain steady compared to FY24.
CAR Group noted that the exit would incur some non-material costs, including redundancies and asset write-downs, but these would be classified as abnormal and excluded from adjusted financial reporting.