Demand is accelerating – van and care hire firm
NORTH East vehicle hire business Redde Northgate says it expects demand for its vans and cars to increase over the next year.
In a pre-close update to investors, the Darlington-based plc said it would meet upgraded financial expectations as underlying revenues excluding vehicles sales were about 24% ahead of 2021.
Like others in the sector, the firm has experienced a shortage of new vehicles and rising values of used stock, although it suggested values would come down going into 2023.
Disposals of vans from the firm’s fleet of 120,000 owned and leased vehicles have been limited in order to meet anticipated demand, and more cars were acquired. The move meant vehicles on hire grew about 8% year on year.
The company said sales had recovered to around 90% of pre-Covid levels but that it was seeing longer hire lengths due to the impact of global supply chain challenges for parts in the wider vehicle service, maintenance and repair process. Martin Ward, chief executive at Redde Northgate, said: “We have delivered a very strong trading result this financial year.
“The breadth of services and products offered through our mobility platform has extended our reach with existing and new partners.
“We have continued to enhance our model, with multi-year service contracts providing ongoing repeatable revenues and earnings.
“With significant further opportunity for growth, and building on the strong performance and momentum in the business, we look to the future with confidence.”
Investors were also told Redde Northgate had experienced some cost inflation though margins have been in line with expectations and underlying cashflow generation remained strong.
In March the firm launched a £30m share buyback programme in which it planned to purchase 24 million ordinary shares to be held in treasury. At the time, Redde said that it already had a good merger and acquisition pipeline and that even after taking into consideration growth capital, dividend payments and the acquisitions, it had substantial headroom.