Van hire specialist Northgate has published its half-yearly results, which suggest that its recovery plan is on track and it is continuing to deliver solid performance in both the UK and Spain.

Darlington-based Northgate, which operates a fleet of 51,000 vans in the UK and 37,700 in Spain, reported profit before tax of £24.6m for the last six months — down slightly from £26.9m for the same period in 2011, but still broadly in-line with expectations for full year. It also managed to reduce net gearing from 105% to 94%, thanks to a £28.1m reduction in net debt to £343.2m.

As has been the case in previous periods, Northgate managed to maintain its fleet utilisation levels by trimming its fleet. Over the last six months, the company’s UK fleet was reduced from 52,900 to 51,000, while utilisation fell from 90% to 89%. This is a smaller drop than during the same period last year.

Northgate said that average hire revenue per rented vehicle “has remained stable since the beginning of the financial year”.

In Spain, the company’s fleet dropped from 38,400 to 37,700, while utilisation remained solid, falling 1% from 91% to 90%.

New locations

Northgate also reported that it expected to open four new UK van hire sites by the end of the financial year (30 April 2012). The firm did not disclose the new locations but said:

Our analysis shows that a branch needs to be approximately 20 minutes from local businesses to meet their requirements.  Analysing the UK population and GDP has identified gaps in our network where we do not currently address many potential customers’ needs, which are met by small local or regional rental operators.

UK vans get younger, Spanish vans get older

Northgate said that the average age of its UK rental fleet had fallen from 21.4 months at the end of April 2012 to 20.4 months at the end of October 2012, and said that it had purchase 9,600 new vans over the last six months.

During the last six months, Northgate said that it had sold 12,000 vehicles — down from 14,500 for the same period last year. Of these, 19% were sold through its Van Monster retail sales operation, which Northgate describes as “more profitable” than other fleet disposal channels.

Conversely, Northgate said that it was “ageing” its Spanish fleet to reduce capital costs and improve cash generation — although it emphasised that it was “still running a young fleet in comparison to the rest of the market”.

Retail boost

Northgate said that the bulk of the reduction in its UK fleet was due to the loss of several large customers. The company’s regional business, which deals with smaller businesses and retail customers, saw vehicles on hire increase by 200 over the last six months.