Shares of Darlington-based vehicle hire company Northgate Plc fell 16% after it said its profit before tax fell about 7% to £72.2 million in the year to April 30 as it hired out fewer vehicles in the UK.
Northgate said it had vehicles on hire of 39,500 in the UK at April 30, down from 42,400 at the same time last year “as a result of a weak second half following the seasonal peak.”
Nonetheless, group revenue rose 7.9% to £667.4 million and the firm proposed an 8% increase in full year dividend per share to 17.3p.
Northgate shares fell about 16% to around 446p to give the company a current stock market value of around £594 million, according to Bloomberg data.
Northgate CEO Kevin Bradshaw said: “Since joining the group in January, I have been impressed with the strength of the Northgate business model and the opportunities within all territories to enhance our market position.
“The performance of the UK business was, however, disappointing with profits impacted by a reduction in vehicles on hire over the second half of the year.
“A full appraisal has been undertaken and several corrective actions have been implemented.
“I am confident that these actions, combined with continued management focus, will drive a significant improvement in performance, particularly in the areas of sales lead generation and conversion.
“Encouragingly, our businesses in Spain and Ireland continue to show good levels of growth.
“I am particularly pleased with the early success of our fixed term offering with over 4,100 vehicles under contract, group-wide, by the year end.
“We have also seen further growth from Van Monster, our retail vehicle disposal channel.
“I have completed an initial strategic review and this has identified four exciting growth opportunities for the group in the medium term.
“Further detail behind these opportunities, our progress against them and key targets will be given at an investor day in October.
“Our proposed increase in dividend this year reflects my strong conviction that the group is well positioned to capitalise on these attractive growth opportunities moving forwards.”