Darlington firm Northgate drives back into profit

Jun 30 2010 By Karen Dent, The Journal

VAN hire giant Northgate is back in profit after restructuring and refinancing of the business.

The Darlington company, which operates in the UK and Spain, made pre-tax profits of £9.6m after exceptional items in the year to the end of April, compared to a loss of £195.6m in the same period last year.

It also reduced its debts from £886m to £598m and boosted its van utilisation figure from 88% to 91% in the UK and from 83% to 88% in Spain.

The company raised £108m at the start of its financial year in a rights issue and also started an aggressive restructure of the business which reduced its number of UK depots from 80 to 65. A total of 131 jobs - around 6% of its British workforce - were shed.

The strong used vehicle markets both at home and in Spain also boosted the business, which plans to push on with further restructuring this year.
Northgate chairman Bob Mackenzie said: “Since the refinancing last year, we have met substantially all of our targets.

“Going forward, we will concentrate on doing simple things very well.  We will complete the UK restructuring.  We will develop further plans for Spain, which is already significantly more operationally efficient than the UK, and will continue to focus on margin.”

The group also announced a shake-up at the top at the start of this month. Paul Tallentire had been due to officially replace departed chief executive Steve Smith on July 1 but Northgate instead decided to appoint group finance director Bob Contreras to the role.

Mr Contreras is now in place, while Mr Tallentire said that “his future lies outside the group”.

Shareholders will not receive a dividend this year.