Shares in FTSE 250 company Zigup have jumped by over 14% today after the group’s half-year update landed well ahead of expectations and came with a clear upgrade to full-year profit guidance.
The North East-based firm was boosted by performance in Spain and steady UK and Ireland trading.
The integrated mobility services group, which provides vehicle hire, fleet management and claims services, said reported revenue increased 2.9% to £929.6 million.
Operational profit improved at a quicker pace, with underlying EBIT moving up 1.4% to £100.4m, while reported EBIT climbed 14.4% to £83.8m.
Reported profit before tax rose 15.8% to £65m, although underlying PBT was broadly flat at £81.7m.
The company’s rental arm remained the main growth engine.
Vehicle hire revenue increased 10.5% overall, driven by Spain where hire revenue rose 16.3% on stronger demand.
UK and Ireland hire revenue was up 6.5%, supported by what the company said was pricing actions and a richer vehicle mix.
Zigup highlighted a major rail maintenance fleet win in Spain and a large fleet management contract in the UK and Ireland, alongside continued momentum from its “One Road” programme that is expanding specialist fleet locations and range.
The business also set out the next stage of its UK and Ireland restructuring, aiming to simplify operations into two core businesses – Northgate Mobility (rental) and FMG (repair and services).
“It has been a great start to the year for our rental businesses with Spain delivering a standout performance and UK&I Rental showing good momentum with recent fleet wins and expansion of our specialist fleet,” said Zigup CEO, Martin Ward.
“Claims & services has continued to add new partners and extended services to existing contracts.
“With good progress made on fleet replacement I am pleased with our cash performance; we are reaching an inflexion point, paving the way for sustained improvements in steady-state cashflow in the years ahead.”
The transformation programme is expected to take around 18 months, with benefits beginning to flow from FY2027.
Zigup said it can deliver about £20m of incremental annualised savings by FY2028 through tighter integration of rental across its branch network, supplier consolidation and technology-driven efficiencies.
The company also added that it is trading well into the second half and expects full-year underlying profit before tax to come in “at least at the top” of the current analyst range of £150-155m.