Northgate car rental profits flat

Northgate is expects its profits for the current fiscal year to remain at about the same level as last year’s, as used car market conditions weaken.

For the year ending 30 April, revenues rose by 10%, to £578.5m. Although both the Spanish and the UK used car markets remained quite strong for much of the year, signs of weakness are beginning to show. Pre-tax profits rose by 5%, to £79.5m, and the group will pay a dividend of 28p, which is an increase of 10% on last year’s.

Over the past year, the group made two new acquisitions in the UK - the Abington Vehicle Rentals fleet, and Hampsons Self Drive Hire. These acquisitions added 1870 vehicles to the Northgate fleet, for a total of 68,600.

In Spain the fleet increased in size by 14%, which included the 700 vehicles acquired with the Alquiservicios purchase in July of 2007. Utilisation levels dropped somewhat in Spain, however, from 90% to 89%.

Philip Rogerson, Northgate chairman, said: “In the current year conditions in the used vehicle market are weaker than last year, with the result that profits overall are expected to be at similar levels to last year. If economic conditions were to deteriorate, we believe our business model has the proven flexibility to enable us to defleet rapidly in order to leave us in a strong financial position when markets improve. Additionally, we believe that the group’s flexible rental model is attractive to customers when capital is constrained and they are unwilling to commit to long-term financing arrangements.”

www.northgateplc.com