Leeds-based Zenith delivers strong income growth despite challenging economic environment

Zenith, which has announced its unaudited second quarter financial results for the period ended September 30 2022, reported that, while supply chain challenges remain, lead times are beginning to shorten from the peaks experienced in the spring and summer.

Over the quarter, Zenith achieved gross profit of £36.7m, an increase of 5.8 per cent; with profit growth recorded across all the company’s divisions and increased rental activity in both corporate and commercial

The Leeds-based company’s total fleet size increased by around 4,300 units to 168,000 units, with the size of the funded fleet growing by around 1,500 units to 72,000 units.

The statement added: “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.”

"Termination volumes in corporate were down 36 per cent year on year, and down 15 per cent on Q1 (the first quarter). This is a deferral of activity and income to later periods, not a permanent change.”

Zenith said its order book stabilised at around 16,000 units over the last two months with supply gradually improving.

The statement said that order intake is slightly lower since the period-end. Zenith said that ZenAuto and the salary sacrifice segment of corporate has recorded lower orders as a result of shifts in consumer confidence, although in salary sacrifice this impact has been mitigated to a large extent by the continuing, favourable benefit in kind taxation environment for Battery Electric Vehicles (BEVs).

Zenith said it had secured a successful extension to November 2025 and upsizing by £250m of its securitisation facilities with existing lenders.

Tim Buchan, the chief executive 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.

“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.”