Northgate hints at further takeovers
12 July 2006
Van hire giant Northgate has given its biggest hint yet that it will grow by acquisition following annual results that show its fleet has now hit 64,000 vehicles in the UK, up 22% on 2005.
When questioned about further takeovers UK managing director Phil Moorhouse refused to deny the possibility, and said: "We are the largest commercial vehicle rental firm now following the acquisition of Arriva Vehicle Rental. We see additional growth in the market both organic and from further consolidation.
"We've looked at a lot of acquisitions over the past few years."
Northgate, which also operates in Spain, has a total fleet size of 111,000 vehicles. The company saw a 10% rise in turnover in the past year to £372.6m with pre-tax profit up 2% at £56.1m.
However, Moorhouse admitted the past year didn't start out well: "In the first six months of our financial year - that's the six months to October 2005 - the market was difficult. Now it's more certain, particularly in terms of RVs." However he sounded a warning that rental rates could rise in the future, but stopped short of saying exactly when.
"There's a lot of cost pressure from makers," said Moorhouse. "There are a lot of costs that we can't keep absorbing indefinitely."
Northgate is also revealed it is actively trying to improve its residual values by controlling disposals.
"We dispose of all our own vehicles through nine locations. We're looking to deal wholesale both to groups and individual dealers and we're trying to increase the amount sold directly to retail to 15% in the next two years as this improves RVs," said Moorhouse.