Northgate profit rises as UK turnaround bears fruit

In the year to 30 April 2019, pre-tax profit rose 14.5% to £60.4m on revenue of £745.5m, up 6.2% on the previous year. Vehicle hire revenue was 9.9% higher at £517.6m, while revenue from vehicle sales slipped 1.1% to £227.8m.

Rental revenue in the UK & Ireland was up 11.3% from the previous year to £315.6m, driven by average vehicle on hire (VOH) growth of 11.3%. The company said that following the return to growth of year-on-year VOH in late 2018, momentum has remained strong throughout this year, resulting in VOH of 47,100 at the end of the year, up 3.4%.

Earnings per share increased 19.1% to 38.6p and the company lifted its total dividend to 18.3p a share from 17.7p.

Chief executive Kevin Bradshaw said: "We continue to make good progress executing our rental strategy to address the compelling growth opportunity in our markets.

"In the UK, our self-help turnaround programme is delivering. We have successfully introduced regular price increases during the year, and applied greater commercial focus to increase the efficiency of our operations. We turned a pricing corner in the second half of the year with our average hire rates returning to year-on-year growth after a three-year period of decline."

Northgate said it expects to deliver a rental margin of at least 15% in the medium-term, supported by the "substantial" margin opportunity ahead for the UK & Ireland, and by a continued "strong" margin in Spain in the context of a highly competitive landscape.

At 1305 BST, the shares were up 0.3% at 323p.