Darlington-based van hire company Northgate Plc said its revenue increased 10.4% to £349.7 million in the six months to October 31 — but profit before tax fell to £31 million from £40 million for the same period of 2016.
An interim dividend of 6.1p has been declared, an increase of 7% on last year.
Revenue from the hire of vehicles increased 2.1% to £234.5 million and revenue from the disposal of vehicles increased 32.3% to £115.2 million.
“In the second half, we anticipate that our business in Spain will continue to trade strongly with the combined minimum term and flexible rental propositions being well received by customers,” said Northgate in its outlook.
“It is encouraging to see 30% of Spanish minimum term growth substituting vehicle ownership, as the potential for further growth in this segment is significant.
“There are indications that the measures to arrest the decline in vehicles on hire in the UK are gradually beginning to take effect.
“We remain focused on implementing self help actions to turn around performance including improving the VOH (vehicles on hire) trajectory during the second half.
“We continue to expect our profit this year to be skewed towards the second half, with various cost savings and benefits from the implementation of our strategy due to impact in the period, albeit with a degree of caution around the level of disposal profits.”
Northgate CEO Kevin Bradshaw said: “This has been a period of reset as we lay the foundations to enable Northgate to deliver our strategy and the targets that we set out at the Capital Markets Event on 4 October 2017.
“There are already signs of the strategy working with 6% growth in closing VOH, 60% of which has been driven by minimum term products.
“Our self help agenda in the UK remains firmly underway and Spain continues to outperform in its rental business justifying further investment as it accelerates its next phase of minimum term roll out.
“We continue to expect our profit this year to be skewed towards the second half, with various cost savings and benefits from the implementation of our strategy starting to have an impact.
“I am confident we will see further benefits of the strategy and investment coming through in subsequent reporting periods, which will generate strong growth in value for our shareholders.”