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Northgate struggles at home

The division suffered from a decline in vehicles on hire
June 28, 2017

The market baulked at the performance of Northgate 's (NTG) UK division following the van hire group's latest full-year results, sending the shares down 16 per cent on the day. The UK operations, which accounted for 62 per cent of revenue during the year, suffered from a decline in the number of vehicles on hire in the UK to a closing figure of 39,500 from 42,400 at end-April 2016. This combined with a negative impact from vehicle depreciation to reduce underlying pre-tax profit to £75m from £83m in FY2016.

IC TIP: Hold at 442p

The group has begun self-help measures such as restructuring the domestic leadership team and investing in digital advertising and efforts to improve lead generation and conversion. In addition, Northgate has made it one of its four key focuses to consolidate the UK's "fragmented" used light commercial vehicle resale market.

Elsewhere, the business has been performing more strongly, with the Spanish operations overcoming challenging market conditions and increasing closing vehicles on hire to 37,700 from 35,700. It also managed to grow its new longer fixed-term contracts to 3,100 vehicles. But it needs to invest in the infrastructure of its Irish operations, after finding it challenging running a national fleet from its Dublin hub.

Analysts at Numis are forecasting profit before tax of £75.2m, giving EPS of 46.6p for the year to April 2018 (from £75m and 47.3p in FY2017).

 

NORTHGATE (NTG)
ORD PRICE:442pMARKET VALUE:£589m
TOUCH:442-442.3p12-MONTH HIGH:576pLOW: 305p
DIVIDEND YIELD:3.9%PE RATIO:10
NET ASSET VALUE:388pNET DEBT:60%

 

 

Year to 30 AprTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
2013610-11.4-5.57.3
201457151.229.910.0
201561483.050.114.5
201661877.646.116.0
201766772.245.717.3
% change+8-7-1+8

Ex-div: 10 Aug

Payment: 23 Sep