Northgate's pre-tax profits rocket
09 January 2007
Author: John Mahoney
CV hire specialist Northgate has released six-month results that sees pre-tax profit rocket to £39.7m, up an impressive 38% over this time last year.
Gross revenue tops out at over £262m.
Speaking exclusively to BusinessCar magazine, managing director Phil Moorhouse pointed towards recent acquisitions as the source of the firm's continued success. Northgate bought Arriva Vehicle Rental in February 2006 and purchased the remaining share of Spanish subsidiary Record Rent a Car three months later.
But, according to Moorhouse, in both cases it wasn't just the case of sitting back and waiting for the money to pour in.
"Following Arriva's purchase we had to work hard to integrate the firm into our existing network, giving the highest priority to retain the existing customer base. Thanks to our work virtually 100% of those customers have been carried over."
Arriva also expanded the company's reach, bringing with it 12 additional locations and 250 new employees. Following the acquisition the next phase of Northgate's business plan begun - a complete restructuring of operations that saw intensive streamlining for the second half of the year.
Closures followed, with the number of offices reduced from 35 to 20. But despite the restructuring costing half a million pounds, it boosted the business' operational efficiency. According to Moorhouse, fleet utilisation now runs at an industry-leading 91% compared to the competition's estimated low 80s.
During the first half of the year, Northgate also saw its fleet size grow by almost 3.5% to 65,300 vehicles.
Moorhouse expects growth to continue - despite gloomy predictions for other businesses by economists - believing the trend of outsourcing will continue as well as consumer's further reliance on internet shopping.
But what part of the CV rental will see the biggest gains?
"We expect growth to continue over the broad range of our business, mainly because of the low van rental penetration in the market," said
Moorhouse, who predicted growth to run at a conservative 5%.
With a host of hungry shareholders to answer to, the Northgate MD is understandably cagey when it comes to where the CV rental firm goes from here. However, its success in Spain, where it dominates the rental market with a 53,000-strong fleet, could signal the firm's willingness to invest in other European markets.
"The key to Northgate success up to now," explains Moorhouse, "has been the flexibility of products we offer our customers."