Financial reports

Zenith Q3 FY24 financial results

27 / 02 / 24 | Group

Good strategic progress and continued fleet growth against a tough economy and weak used car prices

Zenith, the UK’s largest independent truck-to-car vehicle leasing and fleet management company, today published its financial results for the first three quarters of the 2024 financial year.

Fleet highlights:

Total fleet up 3.3% YoY to 173,760 units, up 2.4% QoQ.
Funded fleet up 5.1% YoY to 78,301 units, up 0.6% QoQ, with strong year-on-year fleet growth of 10.2% in company car and salary sacrifice schemes.
Deliveries up 10% YTD and termination volumes up 35% Q3 YTD FY24 YoY.
The order bank continued to normalise, reaching 7,731¹ vehicles at the end of December 2023, with lead times now at 120 days², a level last seen in March 2021.
The Battery electric vehicle (BEV) fleet comprised 39%¹ of the funded fleet and 42%¹ of the order bank at 31 December 2023.

Financial highlights:

Turnover: £581.5m up 20% YoY (Q3 YTD FY23: £482.6m).
Gross profit: £100.4m³ down 8% YoY (Q3 YTD FY23: £108.9m).
Average termination profit per vehicle down 37% YTD YoY on current weakness in used vehicle prices, both for BEV and ICE vehicles.
New initiative launched to extend the current BEV fleet with existing drivers, mitigating inflation of their lease costs and our RV risk.
Operating expenses: £54.4m up 9% YoY (Q3 YTD FY23: £50.0m) driven primarily by inflation and ongoing investment.
EBITDA: £46.0m³ down 22% YoY (Q3 YTD FY23: £59.0m).
LTM⁴EBITDA³ £66.4m (LTM to 31 December 2022: £76.5m).
Cash position at 31 December 2023: £37.0m⁵, up £28.7m YoY, with an available, undrawn revolving credit facility of £65.0m, giving liquidity of £102.0m.

Business highlights:

The Corporate division, the largest within the Group, continued to secure new company car and salary sacrifice customers, growing the fleet by 10% year-on-year.
The Consumer division launched two new solutions to expand its target market and leverage its existing capabilities and infrastructure:
- a Business Contract Hire (BCH) proposition for small businesses; and
- a partnership with a major high street bank to provide Personal Contract Hire (PCH) solutions for BEVs.
The Commercial division, grew its managed fleet following the successful onboarding of Travis Perkins and Wales & West Utilities. In response to changes in customer requirements, the right-sizing of the trailer fleet continues, with a 5% reduction since July 2023.

[1] Excluding managed fleet and commercial vehicles
^[2]December 2024 average order lead time
^[3] Excluding the adjustment relating to the reassessment of residual values on the funded fleet and exceptional items
[4] Last twelve months
[5] Excluding cash held within Special Purpose Vehicles of £26.5m

Tim Buchan, Chief Executive Officer, Zenith, said:

“I am pleased with our performance during the quarter. While inflation continues to drive up operating costs, and weaker consumer demand contributes to a decline in used vehicle prices, Zenith’s diversified offering and innovative approach has again underpinned our top line growth.

“We remain focused on ensuring the optimal efficiencies of our operations, while investing in new propositions and service solutions that can deliver the most impact. We have expanded our offering by opening new vertical markets such as Business Contract Hire (BCH), as well as launching a significant white-label partnership with a high street bank. We’ve also seen strong growth in our funded corporate company car and salary sacrifice schemes, which have increased by 10% year-on-year.

“As our group transformation programme enters its next phase, I am pleased to announce that Andrew Kirby will stay within the Group, and on the Leadership Board, to support its delivery. Andrew will be leading the business transformation team which will migrate all our Corporate division customers onto our new digital platform and oversee the introduction of a new financial system.

“Our liquidity remains strong, with over £100m across our available cash and revolving credit facilities, enabling us to continue growing the fleet and delivering our strategic objectives.

“As always, I’d like to thank all our colleagues for their continued hard work and dedication and our customers and partners for their support and confidence in Zenith.”