Vehicle hire company Northgate plc has returned to growth after seeing reductions in demand for its offering in both its UK and Spanish markets.
The firm, headquartered in Darlington, today reports a 22% rise in underlying pre-tax profit to £60.3m from £49.5m for last year.
The preliminary results for the year ended April 30 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.
There will be a 37% rise in dividend per share to 10p per share, last year’s price being 7.3p per share.
Northgate chairman Bob Mackenzie said: “We are pleased that as a result of the work done over recent years, the business has returned to growth in both the UK and Spain, with increases in the number of vehicles on hire over the year, partly driven by the opening of new sites in the UK to increase customer coverage.
“There is good momentum in both businesses as a result of investment and changes to the commercial and operational teams and while we remain committed to investing in future growth, we believe that the strength of our balance sheet will allow us to further enhance shareholder returns through a continuation of our progressive dividend policy.
“The group continues to trade in line with our expectations and the board remains confident that the business is well positioned to maximise further opportunities for continued growth.”
He added that 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 taken on hire, compared with a reduction of 1,900 in 2013.
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 excellent accessibility. These sites are currently trading ahead of initial expectations and it is anticipated that a further 22 sites will open up in the next three years.
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.”
He pointed out that although Northgate was strong in comparison to its nearest competitors, it was not dominant in terms of its share of the market but this provided good opportunities for growth in its core product offering of flexible vehicle hire.