"Essentially we're an asset management business," says Northgate (NTG) chief executive Bob Contreras. While the vehicle hire group has been investing in sales and marketing to boost hire numbers, it has also focused on maintaining the value of its fleet and gaining a better price on vehicle sales. To this end the group has been successful, driving underlying operating profit for the 2014-15 financial year up by just over a third to £97.8m.
Northgate is focusing its marketing towards higher-margin small business customers: a move that is paying off. The closing number of vehicles on hire in both the UK and Spain was on the rise, while average utilisation rates remained strong. Crucially, the group is also selling more of its disused vehicles at a higher price, by selling directly to customers. Of the 17,600 vehicles sold in the UK last year, 31 per cent were sold directly, compared with 19 per cent in 2010. In Spain, the proportion of vehicles sold by the more profitable retail channel has increased to 16 per cent from 2 per cent over the same period. This boosted the return on capital employed by 310 basis points to 13 per cent.
Broker Numis expects adjusted EPS of 47.5p for the 2015-16 financial year, down from 49.3p last year.
NORTHGATE (NTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 575p | MARKET VALUE: | £766m | |
| TOUCH: | 575-576p | 12-MONTH HIGH: | 664p | LOW: 440p |
| DIVIDEND YIELD: | 2.5% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 320p | NET DEBT: | 79% | |
| Year to 30 April | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 716 | 26.5 | 22.1 | nil |
| 2012 | 707 | 46.0 | 30.4 | 3.0 |
| 2013 | 610 | -11.4 | -5.5 | 7.3 |
| 2014 | 571 | 51.2 | 29.9 | 10.0 |
| 2015 | 614 | 83.0 | 50.1 | 14.5 |
| % change | +7 | +62 | +68 | +45 |
Ex-div: 20 Aug Payment: 22 Sep | ||||
