Hundreds of jobs to be created at vehicle hire company Northgate

Northgate vehicle hire group, of Darlington, is opening new sites, creating up to 330 jobs, after an upturn in business

Northgate Vehicle Hire
Northgate Vehicle Hire

Vehicle hire company Northgate is to create up to 330 jobs and open 22 new sites after seeing increased demand for its offering.

The Darlington-headquartered group, which made a loss of £11m in 2013, has returned to growth after a difficult five years in its UK and Spanish operations.

Northgate yesterday released preliminary results for the year ended April 30, which show a 22% rise in underlying pre-tax profit to £60.3m from £49.5m.

The figures also show a profit before tax of £51.2m after last year’s £11.4m loss, which has seen debt reduced by 5% to £346.1m.

Chairman Bob Mackenzie said Northgate was growing again after five years of decline in both the UK and Spain. Growth in UK vehicle hire was 10.4%, including almost a quarter of this from seven new sites opened in London and the South East since February 2013.

In Spain, 2,600 – or 8.1% – more vehicles were hired, compared with a reduction of 1,900 in 2013.

Unveiling the expansion plans, finance director Chris Muir said: “Our target is to get to 90 sites around the UK and we’re currently at 68. We have nine sites operating in Greater London and think there will be another four in the next six months, then we will look to places like Greater Manchester and the West Midlands.

“We have some presence around the edges of Greater Manchester, the same with the West Midlands, but we aren’t well presented there, unlike the North East, where we grew up and where we’ve got sites in Darlington, Stockton, Wilton, Blaydon and Wallsend.

“We have good coverage there, but there are other areas of the UK where we haven’t got the penetration.”

He said that the expansion was likely to involve smaller sites and existing operations – inherited during company growth – would be relocated if more suitable premises became available.

These would be on an average five-year lease with a three-year tenant-only break.

Northgate has changed its approach for the South Eastern market, where its usual pattern of a customer reception area, workshop facility and considerable parking area has proved prohibitively expensive. Instead, it has leased smaller site with fewer parking spaces, but good accessibility.

The uplift in the Spanish market is being attributed to a focus on the commercial sector, which has offset declines in traditional markets with increases in higher margin SME customers.

Mackenzie added: “We will continue to focus on improved returns. This will be targeted in a number of ways, including increasing prices to our existing customer base and through a continued focus on growth with SME customers. This will build upon the 20% increase in customer numbers experienced in the year.”

Fernando Cogollos, general manager for the Spanish arm, said: “We are envisaging more medium enterprises for Spain. The model in the past was focused on larger companies, mostly in construction and infrastructure companies, but that situation has changed completely now for many reasons, one of them being the decline in activity.

“We have been working to identify new business sources and our business proposition really fits well with the current situation of uncertaiantly and variation in activity.

“We have a very good footprint of branches 23 across country and a very good local presence. I think it’s a very good platform for growth.”

Muir said: “We see opportunities for future growth in both the UK and Spain, and remain confident that we are in a good position to futher capitalise on that.”

There will be a 37% rise in dividend per share to 10p per share, last year’s price being 7.3p per share.

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