Zenith has reported latest financial results showing profit growth across all divisions, plus a growing fleet size and increased rental activity in both corporate and commercial business.

CEO Tim Buchan said the figures were particularly impressive when set against the backdrop of a very challenging economic environment

The leasing, fleet management and vehicle outsourcing business posted a gross profit of £36.7m – up 5.8% – in its unaudited second quarter financial results for the period ended 30 September 2022 and said it had seen strong income growth despite a challenging economic environment.

Adjusted EBITDA (excluding the ZenAuto personal car leasing division) fell 2.9% (£0.6m) year on year, but the firm 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.

The leasing specialist also highlighted that while supply chain challenges remain, lead times are beginning to shorten from the peaks of spring and summer 2022.
Total fleet size increased by around 4,300 units to 168,000 units, with the funded fleet increasing by c.1,500 units to 72,000 units.

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

Meanwhile, termination volumes in Corporate were down 36% year on year, and down 15% on Q1. Zenith noted that this was a deferral of activity and income to later periods, not a permanent change.

Its order book stabilised at approximately 16,000 units over the last two months with gradually improving supply.

The results also show order intake is slightly lower since the period-end; ZenAuto and the salary sacrifice segment of corporate have seen lower orders as a result of shifts in consumer confidence, although in salary sacrifice this has been mitigated to a large extent by the continuing, favourable Benefit-in-Kind taxation environment for Battery Electric Vehicles (BEVs).

Zenith also welcomed the further visibility through to 2028 on Benefit-in-Kind rates on battery electric vehicles (BEVs) in the Autumn Statement and noted that BEVs now account for 26% of the Corporate fleet and represent approximately 60% of the order intake.

The latest figures also showed Zenith generated gross profit of £136.2m and Adjusted EBITDA of £78.2m for the year ended 31 March 2022.

Tim Buchan, chief executive officer, said the figures were all the more impressive when set against the backdrop of a 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.

“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.”

He continued: “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.”