After five hard years, van hire firm Northgate (NTG) has returned to growth both in the UK and at its Spanish operation. New sites are doing better than expected, and more are planned. There’s “good momentum” too, which has prompted the group to hike the dividend by over a third.
Business was so brisk – hires rose 10 per cent in the UK and 8 per cent in Spain - that Northgate decided to sell 30 per cent fewer vehicles. That saved money, but lost £11.6m of profit, so underlying operating earnings fell 16 per cent to £72.6m. Still, last year’s major refinancing slashed interest costs by over £24m, so at the pre-tax level underlying profit rose a fifth to £60.3m.
Forty per cent of the growth in UK hires came from seven new sites opened since February 2013. They lost £2.3m last year, but should make money after two years. Another four sites will open in London within months and 18 in Manchester, the West Midlands and elsewhere over the next three years. In Spain, a sales and marketing push is attracting more of the country’s estimated 1m small companies to flexible vehicle hire.
Reducing the depreciation rate to account for high used van prices has prompted broker Peel Hunt to upgrade its profit forecasts for this year by £10m to £75m, giving adjusted EPS of 40.5p (from 34.3p).
NORTHGATE (NTG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 514p | MARKET VALUE: | £ 685m | |
| TOUCH: | 514-515p | 12-MONTH HIGH: | 619p | LOW: 327p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 293p | NET DEBT: | 89% | |
| Year to 30 Apr | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 750 | 9.6 | 23.1 | nil |
| 2011 | 716 | 26.5 | 22.1 | nil |
| 2012 | 707 | 46.0 | 30.4 | 3 |
| 2013 | 610 | -11.4 | -5.5 | 7.3 |
| 2014 | 571 | 51.2 | 29.9 | 10 |
| % change | -6 | - | - | +37 |
Ex-div: 13 Aug Payment: 23 Sep | ||||
