Redde Northgate to beat full-year profit forecasts, shares spark

(Sharecast News) - Full-year profits are set to beat forecasts at Redde Northgate, the commercial van specialist said on Wednesday, after a stronger-than-expected second half.
Updating on trading at the year end, the firm said momentum has continued to build during the second half, despite the imposition of a third national lockdown.

Total closing vehicles on hire were ahead 2%, with Spain remaining "broadly flat" but the UK and Ireland growing by 4%.

Underlying revenues in the year to 30 April, excluding vehicle sales, were ahead 51% year-on-year, while total group revenues, which do include vehicle sales, were around 43% stronger.

"As a consequence of the stronger-than-expected performance in the second half, the board now expects underling pre-tax profit for the 2021 full-year to be moderately above the top end of the current range of analyst estimates, and not less than £92m," Redde Northgate said. Analysts had been expecting pre-tax profits to be in the range of £83.3m to £88.0m.

Chief executive Martin Ward said: "The second half has delivered a strong set of results. The demand for LCV rental and LCV sales has seen an uplift in the second half, and sets the business up well going into our new financial year.

"We enter the 2022 full year from a position of strength."

Van hire specialist Northgate merged with fleet management firm Redde in February 2020. Ward said the integration plans were ahead of schedule and had "almost" delivered revised targets on cost savings. "This has placed the business in a strong position. However, I recognise there is still much more to do to deliver the full benefits of our strategy," he added.

Shares in Redde Northgate - which is due to publish preliminary results on 7 July - were nearly 5% higher at 381.5p as at 1000 BST.

Numis said: "Good demand for van renal and strong disposal gains have more than offset weak accident management activity due to lockdown.

"We believe the business offers further recovery, self-help and re-rating opportunity." Numis, which has a 'buy' rating on Redde Northgate, has upped its price target to 440p from 350p.