Slower UK puts brakes on Northgate full year profits

A weaker performance in the UK saw full year pre-tax profits at commercial vehicle hire firm Northgate fall to £72.2m from £77.6m.

The company said the results were hit by a lower number of vehicles on hire in the UK and an adverse impact of £5.7m from changes in depreciation rates.

Underlying profit before tax fell to £75m from £82.9m. The full year dividend was lifted by 8% to 17.3p a share.

Closing vehicles on hire fell to 39,500 from 42,400 in April 2016 as a result of a weak second half following the seasonal peak, Northgate said.

There was a strong commercial performance in Spain despite a “challenging market and political landscape” with closing vehicles on hire up to 37,700 from 35,700.

Chief executive Kevin Bradshaw said the performance of the UK business was, “disappointing with profits impacted by a reduction in vehicles on hire over the second half of the year”.

“A full appraisal has been undertaken and several corrective actions have been implemented. I am confident that these actions, combined with continued management focus, will drive a significant improvement in performance, particularly in the areas of sales lead generation and conversion.”

“Encouragingly, our businesses in Spain and Ireland continue to show good levels of growth.”

“On the basis of an initial strategic review, we have identified four clear growth priorities in markets that are attractive and where we believe we have the ability to win. The fixed term opportunity is particularly exciting and we will build on our good progress this year which saw over 4,100 vehicle contracts signed.”