Zenith divisions ‘performing well’ with profits up in latest results

Zenith has reported gross profit of £36.7 million – a 5.8% increase in the last quarter – with profit growth across all divisions, a growing fleet size and increased rental activity in both corporate and commercial.

The publication of unaudited second quarter financial results for the period ending September 30, also revealed that adjusted EBITDA (excluding ZenAuto) was down 2.9% (£0.6m) year-on-year. Zenith said this was due to delays to vehicle deliveries and consequently vehicle disposals and income generated from churn, and investment to support the expected fleet growth as the order book unwinds.

For the half-year and past 12 months ending September 30, gross profit of £71.5m was reported – up 6.7%; with strong profit growth in consumer, driven by growth in ZenAuto’s fleet.

Meanwhile, adjusted EBITDA (excluding ZenAuto) was down 0.7% (£0.3m) on the previous half-year, due to similar dynamics to the quarter end results

Zenith also reported a strong balance sheet with cash position of £55.7m and an undrawn credit facility of £65m, giving liquidity of £120.7m.

Zenith CEO, Tim Buchan (pictured), said: “I am pleased to announce another strong performance for Zenith during the first half of the financial year, all the more impressive when set against the backdrop of the very challenging economic environment.

“Our order book remains at near record levels and all three of Zenith’s divisions continue to perform well.

“While the supply chains issues that have dogged the motor industry continue to bring delays to new vehicle deliveries, we are now seeing those lead times begin to shorten.”

Zenith’s total fleet size increased by around 4,300 units to 168,000 units in the past quarter, with its funded fleet increasing by approximately 1,500 units to 72,000 units.

Despite a moderately improved supply of vehicles, it said that lower deliveries than expected led to fewer end-of-contract terminations as customers were less able to replace their vehicles.

Termination volumes in corporate were down 36% year-on-year, and down 15% on Q1, which it said was a deferral of activity and income to later periods, not a permanent change.

Meanwhile, its order book stabilised at approximately 16,000 units over the past two months with gradually improving supply.

Order intake is slightly lower since the period-end; ZenAuto and the salary sacrifice segment of corporate see lower orders as a result of shifts in consumer confidence, although in salary sacrifice this is mitigated to a large extent by the continuing, favourable benefit in kind taxation environment for battery electric vehicles (BEVs), it said.

BEVs are now 26% of the corporate fleet and represent approximately 60% of its order intake.

Buchan continued: “We also successfully extended our fleet financing, which is particularly pleasing given the challenging credit markets and confirms the underlying strengths of the Zenith business. It also provides us with financial headroom and flexibility for the period ahead.

“As we look ahead to the second half of the year, with the prospect of a difficult winter for the UK and period of economic recession, I am reassured by the resilience of Zenith’s business model and would like to thank our colleagues across the business for their continued support, without which these results would not be possible.”

For the year ending March 31, 2022, Zenith generated gross profit of £136.2m and adjusted EBITDA of £78.2m.