Redde Northgate shares slump despite record annual profit

Vehicle hire company Redde Northgate posted a strong rise in annual profit, driven by higher demand for vans.

The company on Wednesday posted a 34.7% rise in pre-tax profit to £178.7m. Revenue grew by a fifth to £1.49bn and the full-year dividend was lifted by 3p a share to 24p. Despite the bumper earnings, shares in the company were down more than 7%.

“The group fleet is over 130,000 vehicles and multi-year insurer contracts are now at full run-rate. Together with our strong pipeline of new business including an additional large leasing company multi-service contract due to go live in the autumn, we are confident in continuing to deliver further stakeholder value,” said chief executive Martin Ward.

“We continue to enjoy robust demand as we start FY2024 and our recent signing of a further multi-service outsourcing contract for Redde reflects our healthy new business pipeline.”

However, Ward also warned the supply of vans might not catch up to demand for two years, while it could take even longer for prices to fall.

The business said supply challenges are easing as it upped its fleet to 130,000 vehicles, but added there was still a “scarcity” of vans in the UK.

“Supply for vans still remains problematic,” Ward told the London Evening Standard newspaper, adding that expected the challenges to remain for up to two years.

The impact on leasing prices could potentially last longer. Ward said supply in Spain has caught up, but prices had held up. “It’s hard to say if there’s read-across to the UK there,” he said.

Reporting by Frank Prenesti for Sharecast.com