Northgate profit drops as vehicle hire rates, volumes fall

Tue Dec 4, 2012 3:13am EST

Dec 4 (Reuters) - Van rental company Northgate Plc said profit for the first half of the year fell 13 percent as its core UK business was hurt by a drop in average vehicles hired and lower rates.

The company, which began operations in 1981 and rents vans to engineering, distribution and retail companies, said current trading was broadly in line with its expectations.

Northgate said underlying pretax profit fell to 28.1 million pounds ($45.23 million) for the six months ended Oct. 31 from 32.3 million pounds a year earlier.

Revenue fell about 16 percent to 314.5 million pounds. Revenue from its UK operations, which accounts for more than 60 percent of overall revenue, decreased about 10 percent.

Hire revenue in the UK fell 9.9 percent to 149.1 million pounds. The company rented out 1400 fewer vehicles during the period in the UK.

The British company, which operates across the UK, Spain and the Republic of Ireland, had cut its fleet size to 51,000 vehicles in the UK and 37,700 in Spain as of Oct. 31.

Northgate has been cutting its fleet and selling vehicles to reduce debt. It said net debt was 343.2 million pounds compared with 371.3 million pounds in April.

The company said it would pay an interim dividend of 1.3 pence per share.

Shares in the Darlington-based company were trading down about 3 percent at 258.75 pence on Tuesday on the London Stock Exchange.

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