VAN hire group Northgate has unveiled ambitious expansion plans for the New Year.
The Darlington-based company, which has fleets in the UK and Spain, aims to open extra branches in South East England early in 2013.
It will be the first growth spurt for the company since the recession started, and comes as Northgate revealed a slip in sales and profits during a “challenging” first six months of its financial year.
Chief executive Bob Contreras said: “Going forward, after a couple of years creating Northgate as a national brand, we cover around 60% of the main UK population.
“There are opportunities to grow. We will be opening four new sites around the M25 area between February and April next year. It is the first time in around four years that Northgate has opened new sites.”
And he has plans for a further 20 to 30 branches over the next few years.
“We have 60-plus branches at the moment. We will carry on this model of filling in the gaps and we aim to grow by around 50% over two to three years,” said Mr Contreras.
“It will all be organic growth. We have no interest in buying other businesses and reorganising how they run. There is an opportunity to expand across the UK and increase sales.” He announced the expansion as the company posted a dip in turnover to £314.5m from £375.7m in the six months to the end of October. Pre-tax profits fell from £32.3m to £28.1m.
Average utilisation of its vehicles remained flat at 89% in the UK (90% last year) and 90% in Spain (91%).
But Northgate said that the decisive actions it has taken since the summer of 2010 mean it is meeting its targets to improve efficiency, customer service levels, strengthen its balance sheet and increase return on capital.
It has also cut its net debt from £371.3m at the end of April to £343.2m by October 31.
Mr Contreras said: “It has been difficult in both markets but we broadly maintained our pricing and our utilisation remains strong. Spain is a very difficult market and the focus remains the same – price increases to generate better returns.”
The company is aiming to keep vehicles for longer in Spain rather than renewing them as quickly as it does at the moment, which should boost returns. Contreras added: “We have no plans to exit Spain.”
Northgate increased the interim dividend to 1.3p, after reintroducing it last year.
Mark Fleetwood, from N+1 Singer in Newcastle, said: “Northgate is navigating through the challenging market conditions well and the focus on generating cash from unutilised/end of life assets and improving return on capital employed continues to add value.”
