Addison Lee profits under pressure from rise of mobile app challengers
Addison Lee’s profits are being driven down by rising competition from mobile-based apps.
The UK private car hire company owned by private equity giant Carlyle has reported post-tax earnings for the year to August dipped to £11.6m, down almost two-thirds from £32.9m in the previous year.
New players in the market, led by US upstart Uber, have piled the pressure on industry incumbents as they rapidly expand around the world.
Addison Lee was founded by London cabbie John Griffin in 1975 before being taken over by Carlyle in 2013.
Read more: Addison Lee is taking the fight against Uber to the Big Apple
In the year to last August, Addison Lee pulled in sales of £197m, up slightly from £196.6m in the year before. A strategic review that had a price tag of £4.2m and restructuring costs of £3.6m dragged on profits.
Addison Lee is planning further expansion both inside and out of the UK. In June it was revealed the company was buying rival Tristar.
The financial details of the deal were not disclosed, but City sources put the valuation at around £30m.
Tristar, which operates the largest luxury car fleet in the UK, has revenues of £50m per year.
Meanwhile, a new contract for Addison Lee drivers has resulted in a seven per cent boost to their earnings.
Read more: Addison Lee is pouring cash into its luxury car fleet
The new deal was road tested by a small number of the private car hire company’s drivers, who reported an increase in the amount they are taking home compared with the same period last year.
The deal is meant to incentivise drivers to work at peak times.
“It’s more transparent and it’s more competitive,” Catherine Faiers, operation director at Addison Lee, told City PM
Not all of Addison Lee's drivers have welcomed the changes however, and some recently held demonstrations around the Capital and outside the headquarters of Carlyle.