Redde Northgate sees FY profits 'comfortably ahead' of consensus

Commercial vehicle rental provider Redde Northgate said on Tuesday that full-year profits were set to be "comfortably ahead" of consensus expectations as it announced a £30m share buyback.

In an update for the year ended 30 April 2022, the company said it was trading ahead of expectations, driven by a strong performance across the business.

Further to the interims on 1 December, it has continued to de-fleet a lower number of vehicles due to rental demand and new vehicle supply constraints with used vehicle market values staying strong. Vehicle supply constraints are expected to continue through FY 2023.

Redde said volume recovery was held back in December and January by the Omicron variant and work-from-home restrictions. However, there has been "good improvement" since the beginning of February and volumes are now running at around 90% of pre-Covid levels.

Based on current trends, it now expects full-year underlying pre-tax profit of around £150m, comfortably ahead of consensus expectations of £133.9m.

Redde also announced the launch of a £30m share buyback programme that is expected to be completed by 15 September.

"The group’s objective is to employ a disciplined approach to investment, returns and capital efficiency to deliver sustainable compounding growth," it said.

"It continues to see exciting opportunities to deploy capital organically and has a good M&A pipeline. Even after taking into consideration capital to fund organic growth, payment of dividends in line with the company’s dividend policy and acquisitions within the M&A pipeline, the company has substantial headroom under its facilities and target leverage of 1-2x."