Shares in Zigup PLC (LSE:ZIG) fell almost 9% to 330p despite the vehicle rental and fleet management group reporting results broadly in line with expectations.
Revenue for the company previously known as Redde Northgate rose 2.3% to £1.56 billion in the year to 30 April 2025, but underlying profit before tax fell 7.6% to £166.9 million, mainly due to a 15.2% decline in disposal profits and a reduction in Claims & Services earnings following a cyber incident earlier in the year.
Reported profit before tax plunged 37% to £101.5 million, reflecting exceptional items of £20.6 million from the expected full costs withdrawing from the personal injury market and £2.8 million for the cyber incident, with a non-cash depreciation adjustment of £26.5 million.
Rental revenue climbed 5.2%, supported by strong VOH growth in Spain and pricing actions in UK&I. Group fleet size increased to 131,600 vehicles, with fleet age reduced in both core geographies due to improved vehicle supply.
Zigup increased its final dividend by 2.3% to 26.4p, and said it maintained a strong balance sheet with leverage of 1.8x and £412 million in facility headroom following refinancing activity.
Chief executive Martin Ward said: "The group has delivered a strong operational performance... and it sets us up very well for the coming year."
Looking to the current year, he expects underlying EBIT growth in the mid to upper single digits, before the impact of disposal profits.
Analysts at Panmure Liberum underlying PBT was above the consensus forecast of £161 million and a decline "had been expected", though the results contain "several moving parts with growth in rental activities offset by declines in profits on vehicle disposals and Claim & Services".
Growing rental earnings were a positive, reflecting vehicle on hire growth in Spain more than offsetting a decline in the UK, but disposal profits declined and are expected to continue to decline in FY26 "as second-hand values of vehicles normalise from post-COVID inflated levels".