Leeds-based Zenith sees revenues rise to over £580m but higher costs hit profit margins

Turnover was up 20 per cent year-on-year to £581.5m but gross profit fell eight per cent to £100.4m.

Operating expenses were up nine per cent to £54.4m as a consequence of both inflation and ongoing investment in the business.

Tim Buchan, Zenith chief executive officer, 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."

Mr Buchan said the company has seen growth in several different business areas.

The firm’s consumer division has launched a Business Contract Hire proposition for small businesses, while the Commercial division grew its managed fleet following deals with Travis Perkins and Wales & West Utilities.

Mr Buchan said: “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, 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 per cent year-on-year.”

The company has also said it is “right-sizing” its trailer fleet, with a five per cent reduction in numbers since July last year in response to falling demand for such vehicles.

Mr Buchan added: “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.”

The company announced its Business Contract Hire (BCH) scheme in January – aimed at small businesses seeking to modernise their fleets.

Mr Buchan said at the time: “Small business contract hire is a natural extension to our offering and one which we think will resonate with a growing market sector.

"This new proposition provides companies, typically with less than 10 employees, the opportunity to make the transition to battery electric vehicles, taking advantage of the benefit-in-kind rates as well as the flexibility to build a lease that meets the needs of their business, now and as they grow.”