Northgate looks to expansion in Europe
Northgate is looking at expanding its rapidly growing commercial vehicle hire operations into Europe, where it has already identified acquisition targets.
Steve Smith, chief executive, said: “We are focusing on the French and Spanish market and have already had preliminary discussions.”
The company yesterday reported a 17 per cent jump in pre-tax profits for the half year to October 31 from Pounds 13.9m to Pounds 16.2m, slightly above expectations. Sales rose 5 per cent to Pounds 136.5m.
Michael Waring, chairman, said: “Hire rates have been maintained despite a low interest rate and low inflation environment and we have generated an increased contribution from the disposal of used vehicles.”
The shares rose 27 1/2p to a 52-week high of 517 1/2p.
The company owns a fleet of 38,500 vehicles that it rents out from 55 sites. It has pledged to raise the number of sites to 100 and its fleet to 50,000 by April 2004, in effect doubling the size of the business in five years.
“We remain well on track to achieve our growth target. There is very much a trend towards outsourcing company fleets,” Mr Smith said. Both British Telecommunications and Consignia were considering outsourcing their fleets, a move that would give a huge boost to the vehicle hiring industry.
Mr Smith said Europe was ripe for Northgate’s business model, pointing out that only 3 to 4 per cent of company vehicles in Europe are rented out, compared to 10 per cent in the UK and 30 per cent in the US.
“Our intention is to make an acquisition and develop that with our model for a subsequent roll-out across Europe,” he said.
The interim dividend is 4.65p (4.4p), payable on earnings up 15 per cent at 18.3p.
Page 23; Edition London Ed1; Section COMPANIES & FINANCE UK AND IRELAND
Copyright 2002: Financial Times Group
