Zenith Automotive Holdings Limited - 2021 interim results

31 / 12 / 21  |  Reports

ZENITH FLEET PASSES 150,000 MILESTONE AND REPORTS STRONG PERFORMANCE IN THE FIRST HALF

We’re pleased to report that Zenith’s interim results for the year ending 31 March 2022 show the strong trading momentum in the prior year has continued in the first half of the new financial year, with the Group reporting solid results as our fleet surpassed 150,000 units for the first time. Income and operating profits are also ahead of the prior year in each of our core divisions: Corporate, Consumer and Commercial.

The strength and resilience of our model, covering all vehicle types, a variety of channels, and a wide range of services is a key driver of our continuing strong performance. The long-term contracts and customer relationships that form the foundation of our business are also key to our success.

Zenith leads the way towards carbon neutral

During the period, Zenith took further strides in its sustainability strategy. Zenith signed up to the EV100 global declaration* to accelerate the transition to 100% zero-emission cars and vans, announced on Transport Day at COP26. The transition of customer fleets in our Corporate and Consumer books, in particular, continues to accelerate, with battery electric vehicles (BEVs) accounting for 17% of the car fleet and 79% of current orders within salary sacrifice. The BEV order book and our ongoing initiatives to enable and influence customers to change to zero-emission vehicles is expected to transform the fleet in the near future.

Zenith also became the only UK fleet company to have committed to the Science Based Targets initiative (SBTi)**. The science-based targets show companies how much and how quickly they need to reduce their greenhouse gas (GHG) emissions to prevent the worst effects of climate change – and Zenith is proud to have made this demonstrable commitment to reducing our emissions.

Commenting on the results, Tim Buchan, chief executive officer, said:

“I’m delighted that Zenith has continued to go from strength to strength, delivering record results and significant growth across all divisions despite challenging market conditions.

“Alongside these results, we’re also proud to have accelerated our mission to eliminate tailpipe emissions from the UK vehicle parc. Zenith has seen growth across all three of our core divisions and backed this up with meaningful environmental commitments, signing up to the EV100 declaration at COP26, and adopting our own SBTi commitments. These actions, together with our record performance, further demonstrate how profit and purpose can coexist.

“Whilst we anticipate continued short-term challenges in the automotive sector and the potential of further restrictions related to COVID-19, combined with working from home again, Zenith is well positioned for the remainder of the year.”

Divisional update

1. Corporate division

Our Corporate division continues to strive to deliver the highest levels of customer service that we delivered throughout the difficult COVID-19 lockdowns in 2020/2021 against a backdrop of challenging supply chains across the automotive sector.  As a result, and after a sustained period of strong orders, the division now has a record order book to flow through to vehicle deliveries, particularly when the current market conditions in the automotive sector begin to ease. Within our Rental business, demand has recovered following the easing of government restrictions in the year. Whilst Rental demand has recovered strongly, it is not yet at pre-COVID-19 levels, and the business continues to experience headwinds from ongoing supply chain challenges. Similarly, in-life services within Corporate have shown strong recovery bringing activity almost back to pre-COVID-19 levels. However, these negative impacts have been more than offset by our performance in disposing of vehicles that have come to the end of their leasing period, with market prices seeing substantial increases during the course of 2021.

2. Commercial division

In our Commercial division, the integration of the trailer rental and fleet services businesses acquired in 2020 has progressed well. Customer demand in our chosen sectors has remained particularly high, delivering record utilisation of our trailer rental fleet.  We expect to see further progress in customer service and operating performance through the remainder of the year.

3. Consumer division

Our ZenAuto personal contract hire (PCH) business unveiled its first nationwide, television marketing campaign during the period, and launched a new used PCH proposition. We have 8,000 vehicles on the road, an increase of 84% year-on-year, and the order book has gone from strength to strength.

 

Footnotes

* EV100 is a group of businesses from more than 80 countries, which have pledged to work towards increasing demand, influencing policy, and driving mass roll-out of electric vehicles, helping to make electric vehicles more rapidly affordable for everyone. The Group has worked closely with the UK government and the UN High-Level Climate Champions on the declaration, which states, “as business fleet owners and operators, or shared mobility platforms, we will work towards 100% of our car and van fleets being zero-emission vehicles by 2030 or earlier.”

** the Science Based Targets initiative (SBTi) is a partnership between CDP, a not-for-profit charity that runs the global environmental disclosure and reporting system, the United Nations Global Compact, World Resources Institute (WRI) and the World Wide Fund for Nature (WWF).

 

Divisional description:

Corporate

Our Corporate division offers fully outsourced company car and van schemes, vehicle funding, salary sacrifice solutions and short-term rental vehicles, as well as a comprehensive suite of ancillary services and products. We focus on customers with larger fleets (generally more than 100 vehicles) where we are often the sole supplier and service quality is an important differentiator.

Commercial

Our Commercial division offers fleet management services and funding solutions for light commercial vehicles, heavy goods vehicles and specialist vehicles. We are the UK’s largest operator in large commercial vehicle management and trailer rental.

Consumer

Our Consumer division is comprised of two main businesses: ZenAuto and business process outsourcing. ZenAuto is the UK’s leading fully end-to-end, online new and used car leasing platform for consumers. Our business process outsourcing operation offers back-office services for the finance arms of leading automotive manufacturing and consumer finance businesses.