Northgate drives back into profit

The Darlington-based company is close to completing a UK restructuring which will see its hire companies cut from 20 to 12 and brought under a common brand, saving an annual 10m from next year.

Depot numbers have also been cut from 80 to 65 while the company has shed 6 per cent of its workforce – 131 jobs – during the year.

The self-help measures and a 6.5m boost from recovering second-hand prices helped Northgate post pre-tax profits of 9.6m in the year to April 30 – bouncing back from a 195.6m loss when it wrote down fleet values during the worst of the recession.

The firm is now using 91 per cent of its UK fleet – up from 88 per cent previously – although it has cut the number of vehicles by 3 per cent to 60,900 and extended the average age of its vehicles to boost cash.

Shares jumped 15 per cent as the results impressed City analysts, while Northgate pushed through a rise in hire rates which helped revenues 3 per cent higher.

Northgate's balance sheet is also in healthier condition after a 108m fundraising which helped slash net debt by a third to 588m at the year end.

Chairman Bob Mackenzie said trading since the year end was in line with expectations despite a backdrop of difficult conditions and looming cuts in the UK and Spain, its other main market.