Zigup maintains forecasts as new vehicle supply improves

24th Sep 2024 10:16

(Sharecast News) - Commercial vehicle rental provider Zigup reported significant improvements in new vehicle supply in an update on Tuesday, bolstering its fleet replacement plans amid robust demand for light commercial vehicles (LCVs).

The FTSE 250 company, which was holding its annual general meeting, said that had facilitated the continued de-ageing of its fleets across various geographies, contributing to the normalisation of residual values in the used LCV markets as older vehicles were phased out.

Zigup, formerly known as Redde Northgate, said enhanced vehicle supply opportunities would drive higher capital expenditure on fleets this year.

The increase aligned with its strategic objectives of delivering profitable growth, generating attractive cash flows, and achieving strong returns on investment that surpass its cost of capital.

It reaffirmed that its leverage remained within the targeted range of 1x to 2x, supported by £1.4bn in fleet assets.

The broader macroeconomic environment was supporting Zigup's operations, the board said, with supply chains normalising and inflation rates easing.

Those factors were contributing to reduced timeframes for vehicle repairs and replacements, enhancing overall operational efficiency.

Zigup said it was advancing its strategic pillars - 'Enable', 'Deliver' and 'Grow' - by investing in infrastructure capacity, including the opening of two new locations in Spain, and the UK and Ireland.

Additionally, the company said it was enhancing its technology infrastructure as part of an ongoing programme to deliver an excellent customer experience.

Zigup announced that its Spanish rental business would be showcased at a capital markets event in Madrid on 26 September, highlighting the attractive market outlook in the region.

The company was also seeking shareholder approval for a final dividend of 17.5p per share, to be paid on 27 September.

If approved, this dividend would bring the total ordinary dividend for the year ended 30 April to 25.8p per share.

Looking ahead, Zigup said it was confident in its long-term growth strategy, maintaining an unchanged outlook for the year.

The board was optimistic about the group's prospects, supported by stable headcount levels and ongoing strategic investments.

Zigup's next scheduled trading update would be its interim results for the six months ended 31 October, expected on 4 December.

At 0947 BST, shares in Zigup were down 0.13% at 377.5p.

Reporting by Josh White for Sharecast.com.