Carsales.com (CRZ) is a public company listed on the Australian Stock Exchange (ASX); with a total market capitalization estimate of $2.24 billion. Since going public in 2009, Carsales.com continues to seek opportunities to maximize long term shareholder value and aggressively manage growth
Originally formed in 1998; Carsales.com business focus was to develop and provide the premier online marketing platform for the Australian automotive retail industry. Since that time operations have expand to incorporate new technologies and product offerings; enabling Carsales.com to become a market leader with an estimated 80% of the auto retail industry online advertising. In addition the company has undertaken a growth strategy which uses both organic expansion and acquisition.
This growth has included expansion of the product lines with specialized sites, market data collection and sales, an online consumer magazine and recently generic classifieds; with the launch of quicksales.com.au; locally, along with geographic expansion such as that expected with the recent iCar Asia announcement.
In order to manage this growth Carsales.com has separated its operations into two business units; defined as (see Appendix 1):
1. Online Advertising Services:
The division comprises two key products:
a) Classifieds Group is currently the major product offered by the Company and encompasses both private sellers and dealer customers. Classified advertising typically involves the owner of a specific item, advertising their item for sale via a particular medium, which in the case of
Carsales.com, is through its online websites.
b) Display advertising: typically involves corporate customers such as automotive manufacturers/importers, finance and insurance companies etc., placing advertisements on a carsales.com Ltd’s website.
2. Data and Research Services: The carsales.com Ltd divisions of Redbook, LiveMarket, Datamotive and Datamotive Business Intelligence provide various solutions to a range of customers including manufacturers/importers, dealers, industry bodies, finance and insurance companies offering products including software, analysis, research and reporting, valuation services, website development and hosting as well as photography services. This segment also includes display advertising related to these divisions. ACCT 7106 Financial Statement Analysis – Team Project Part A
Overview of Macroeconomic Conditions
International Economic Outlook
The conditions of the global economy show signs of weakening since mid-2011, a situation that persisted for the year 2012, particularly for the Eurozone countries which face an economic downturn scenario, which is based on a decline in economic activity and the raise of unemployment rates in 2012, which exceeded
20% in some countries of the region. In contrast to the situation of the countries of the Eurozone, the U.S. economy recovery continues but at a moderate pace, which is justified by a reduction in unemployment, however, has still not recovered the levels previous to the crisis of 2008, which limits private consumption.
However, consumer confidence continues to improve. On the other hand, Japan has shown slow growth rates, a situation that is justified by a contraction in economic activity, resulting from a decrease in exports to the European market and China, coupled with the territorial disputes faced between Japan and the latter. In the case of China, this recorded a decline in economic activity in 2012 relative to previous years, however, the stimulus measures taken by the authorities have had a positive effect on domestic demand, a situation that will contribute positively to the economic growth.
Domestic Economic Outlook
The growth of local economic activity during 2012 was within expectations throughout the year to the
September quarter (3.1%), although the growth during that quarter was lower. In terms of…