Northgate rules out shedding more staff

Mar 18 2010 by Karen Dent, The Journal

COMMERCIAL van rental group Northgate is to continue tightening its belt but chiefs said its cost-cutting would not include axing more staff.

The heavily-debted Darlington company shed around 360 jobs last year across the UK, Ireland and Spain, and reduced its UK van numbers by almost 12,500 to 61,000. The firm also closed 12 depots, leaving it with 72.

But finance director Bob Contreras said: “We really are a support services company and we need to be efficient – that is not necessarily a head count cost. That has been our focus for at least a year or so. Our trading in the UK is quite promising but the economy is going to continue to be an issue.”

The company said that in the four months to the end of February, 91% of its vehicles were being utilised, up 5% on the same period a year earlier. Hire revenue improved by 3% in the same period.

In a trading update released to the stock exchange, Northgate also said it expects the UK’s used vehicle market to remain strong.

Mr Contreras said: “Our by-word is whatever assets we have are 90% utilised and we should always adjust our position to that. The UK rental market is pretty stable.”

But he admitted the picture was not so bright in Spain, where the economic recovery is taking longer to kick in.

Fleet numbers were slashed in Spain from 55,200 to 49,700.

Spanish bad debts also increased during the six months to the end of October.

But Mr Contreras said: “Partly driven by the business in Spain, the reductions in the fleet has reduced the debt and has generated cash.”

Northgate had debts of £706m at the end of October and aims to bring the figure below £650m by the end of April – £236m lower than the same time last year.

The company said the UK outlook remained uncertain and “very difficult” in Spain but Mr Contreras said Northgate was on a secure financial footing.