A two-year restructuring effort is paying off for Northgate and an 11 per cent increase in underlying profit before tax to £59.7m was better than expected. Net debt has tumbled and the dividend is back, too, which sent the shares surging 10 per cent. Yet the van hire market is tough and this year will not be easy.
Indeed, the number of vehicles out on hire fell 7 per cent in the UK, though price increases capped the drop in rental revenue to 4 per cent. Self help and an £8m contribution from vehicle sales meant operating profit inched up to £74.4m. Clearly, conditions in Spain worsened. Revenue there fell 10 per cent and operating profit slipped 4 per cent to £35m; cutting costs and fewer bad debts responsible for a 110 basis point improvement in margins to 19.1 per cent. A firm grip on borrowing proved crucial to the revival of the dividend. Downsizing the fleet is throwing off cash and underlying cash generation of £138m put a serious dent in net debt. It saves Northgate £7.5m in interest payments, too.
Broker Peel Hunt expects adjusted pre-tax profit of £57.5m in 2013, giving adjusted EPS of 30.9p (30.8p last year).
NORTHGATE (NTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 201p | MARKET VALUE: | £267m | |
| TOUCH: | 199-201p | 12-MONTH HIGH: | 345p | LOW: 157p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 7 | |
| NET ASSET VALUE: | 275p* | NET DEBT: | 101% | |
| Year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 578 | 79.5 | 86.7 | 28.0 |
| 2009 | 771 | -196.0 | -573.0 | 11.5 |
| 2010 | 750 | 9.6 | 23.1 | nil |
| 2011 | 716 | 26.5 | 22.1 | nil |
| 2012 | 707 | 46.0 | 30.4 | 3.0 |
| % change | -1 | +73 | +38 | - |
Ex-div: 15 Aug Payment: 21 Sep | ||||
