Van hire provider Northgate, which has a fleet of 61,000 light commercial vehicles here and over 55,000 in Spain, has warned customers that it is planning to increase rental prices again.
 

The company has already raised rates by over 2% since April.

This morning (Tuesday 8 December) it published its interim results for the half-year to the end of October 2009 in which it warned that it will “continue to focus on increasing hire rates as a key element of returning operating margins to more satisfactory levels”.

In the statement it said it is also benefiting from improved utilisation of its fleet thanks mainly to a reduction in fleet size and also from strengthening residual values.

As a result, it made a profit before tax of £22m in the six months to the end of October.

“Our main focus continues to be on improving hire rates through a combination of customer -specific rate increases and increased pricing for new vehicles,” it told investors.

“During the period the discounted offers introduced when utilisation levels were under severe pressure in January 2009 came to an end and have not been renewed.

"As a result of these factors we have increased hire rates by 2.3% since the start of the period; which compares to a 6% fall in the prior year.

"We continue to focus on increasing hire rates as a key element of returning operating margins to more satisfactory levels.”

Its UK rental operating margins increased to 14.9% from a low of 6.7% in the second half of 2008.

It put this down to a combination of improving rental market conditions and actions such as increasing fleet utilisation to over 91%, as well increasing hire rates by 2.3% since April 2009 and the increase in used vehicle prices.

As a result of these factors and a period of equity raising and strong cash generation it has reduced net debt to £706m from £886m in April 2009.

“We have increased utilisation rates in the UK and Spain, achieved improvements in pricing, delivered cost savings and reduced indebtedness whilst benefiting from an increase in used vehicle prices,” explained Northgate chairman Philip Rogerson who retires at the end of the year.

However, the company, which rents light vans and sells a range of fleet products to businesses via a network of hire companies, says the future is still uncertain.

“Given the continued uncertain economic environment, particularly in Spain, our focus remains on hire rate improvement, efficient fleet management, further cost reductions and cash management,” warned Rogerson.

Fleet News readers can view the full interim statement here.