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December 8, 2010 3:04 am
Northgate, the biggest van hire company in the UK and Spain, exceeded market expectations with a 24 per cent increase in first-half underlying profit to £27.2m (£22m).
|Sales||Pre-tax profit||Basic earnings per share||Dividend|
|↓ 1.7%||↑ 96%||↑ 106%||-|
It said the reorganisation in the UK and Spain was progressing well and had been able to boost prices while increasing utilisation rates to 92 per cent (91 per cent) and 90 per cent (88 per cent), respectively.
Bob Contreras, chief executive, said: “We’ve had a good first half; there’s a lot of change going on particularly in the UK business and some of that is starting to bear fruit.”
He added that price increases, likely to average 5 per cent in the UK over the year to end April 2011 and 2 per cent in Spain, were necessary.
In the UK, underlying rental operating margins rose from 16.5 per cent to 23.9 per cent in the six months to October 31. UK restructuring has replaced 20 companies, operating under separate brands, with 12 business areas under the Northgate name. Annualised cost savings should exceed £10m ($16m) from April 2011 with further savings expected next year.
In Spain, underlying rental operating margins rose from 14 per cent to 16.4 per cent, but the economic climate remains difficult and Northgate is reducing its exposure to construction by moving into areas such as retail and energy.
As of October 31, the UK fleet was 60,700 and the Spanish fleet 45,900, down from 60,900 and 48,900 in April. It also had £171m headroom on its committed debt facilities of £773m. These are due to expire in September 2012 and are being reviewed.
In the first half, Northgate’s revenues dropped 1.7 per cent to £367.9m (£374.3m), while pre-tax profits rose from £5.72m to £11.2m. Diluted earnings per share were 15.1p (19.7p). There will be no interim dividend.
Northgate’s shares rose 7.63 per cent to 232¾p, up 16½p by mid-afternoon trading on Tuesday.
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