Van hire firm warns of cost reductions

Van hire firm Northgate warned of further cost reductions after admitting the outlook for its UK market remained uncertain.

The Darlington-based company will also focus on improving hire rates and "efficient" fleet management as it continues its battle with challenging economic conditions in the UK and Spain.

Northgate achieved an average utilisation rate of 91 per cent for its fleet in the UK in the four months to February 28, a five percentage point improvement on the 86 per cent achieved a year ago. This was after the fleet size decreased by 1,000 to 60,000 between October and February and by more than 9,000 since October 2008.

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Hire revenues per rented vehicle continued to improve, increasing by around 3 per cent in the quarter to February compared with the quarter to April 2009.

The company revealed in December that it had closed eight hire centres in the UK in the first six months to the end of October, leaving it with 72 locations and 20 operating companies. Headcount fell by more than 90.

It added today: "As expected, the macroeconomic conditions continue to adversely affect the group's markets; with the outlook for the UK remaining uncertain and Spain continuing to be very difficult. Our focus therefore remains on hire rate improvement, efficient fleet management, further cost reductions and cash generation." Northgate said results for the financial year were likely to be in line with management's expectations.

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