(Alliance News) - Northgate PLC on Tuesday said it expects further revenue growth in the year ahead following strong performance reported in its recently ended financial year.
The vehicle hire and sales company reported a 6.2% growth in revenue to GBP745.5 million in the year to the end of April compared to GBP701.7 million a year prior, resulting in a pretax profit increase of 15% to GBP60.4 million from GBP52.7 million.
Rental revenue in the UK & Ireland in financial 2019 increased by 11% over the prior year to GBP315.6 million, Northgate said, driven by telesales and new digital marketing programme.
"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," explained Chief Executive Kevin Bradshaw.
The total UK & Ireland year-end fleet size of 54,600 vehicles decreased from 56,700 in the prior year. Some 15,700 vehicles were purchased during the year and 17,800 vehicles were de-fleeted, Northgate said.
Disposal profit of GBP10.8 million was 12% higher over the prior year, driven by a 12% increase in the average profit per unit on disposals to GBP512 from GBP457 in financial 2018.
Rental revenue in Spain grew 7.7% to GBP202.1 million, underpinned by stable macro-economic conditions and "strong" growth in the Spanish rental fleet. At constant exchange rates, removing the headwind of foreign exchange, the reported growth in rental revenue was 7.9%.
The total fleet size in Spain increased by 6.5% to 51,100 vehicles, with 13,900 vehicles purchased and 10,800 de-fleeted.
The average profit per unit on disposals in Spain fell by more than 28% to EUR626 from EUR871 last year, resulting in profit from vehicle sales decline of 36% to GBP6.4 million.
Northgate declared a dividend of 18.3 pence a share, up 3.4% from 17.7p paid the year before.
Looking ahead, the company said it expects low to mid single-digit revenue growth in financial year 2020, driven by low single-digit vehicles-on-hire growth anticipated in the UK & Ireland, and low to mid single-digit vehicles-on-hire growth estimated in Spain.
Northgate shares were trading 0.1% higher on Tuesday morning in London at 322.20 pence a share, but the stock is down 14% in the year-to-date.
"We are disappointed with the share price performance and remain focussed on addressing the undervaluation of the group," said
"The search for our new chair is well advanced with an exceptionally strong shortlist," added
Former Chair Andrew Page has left the firm at the end of March after four years in the role. He was replaced on an interim basis by Senior Independent Director Bill Spencer.
