Vehicle rental firm Redde Northgate scores record annual results

Redde Northgate has posted record annual performance on the back of new contract wins and a bumper growth in its Spanish division.

Reported turnover at the Darlington-based vehicle hire supplier increased by around a fifth to a £1.49billion for the 12 months ending April, while overall pre-tax profits climbed by 34.7 per cent to £178.7million.

Growth was driven by claims and services revenues jumping by 37 per cent as the firm’s Redde businesses benefited from traffic volumes rebounding close to pre-pandemic levels and the signing of multi-year deals with insurers.

The company also gained three ‘notable corporate’ contracts for repairs in Spain, where a mix of strong economic growth, price hikes and expanding hiring fleet tipped revenue in the division above the £300million mark.

Its UK and Ireland arm was impacted by an undersupply of new vehicles primarily caused by a semiconductor shortage. 

However, sales still expanded by a healthy 6.1 per cent thanks to soaring demand for accident management services and products like telematics – devices for monitoring driving behaviour.

Martin Ward, chief executive of Redde Northgate, said: ‘This is an excellent set of results, and we are proud of what the group and all our colleagues have achieved this year, delivering record revenue and profits and strong levels of cash generation.’

Andy Murphy, director at Edison Group, said the performance demonstrates ‘a general recovery of European supply chains, which have been severely disrupted by the war in Ukraine, the pandemic, and Brexit’.

He added that the firm was profiting from a gradual improvement in HGV driver shortages, which have declined by about 40 per cent in the UK since January.

Redde Northgate noted that robust demand had continued into the new financial year, supported by the gaining of an additional multi-service outsourcing contract. 

Reflecting this positive outlook, the firm has recommended a 10 per cent hike in its final dividend to 16.5p per share, equating to an annual dividend of 24p. 

But Redde Northgate shares were the biggest faller on the FTSE 250 Index, dropping 7.7 per cent to 349p by mid-afternoon on Wednesday.

Net debts rose by around £112million due to the acquisition of treasury shares, rising principal lease payments as the group expanded its leased fleet size, and adverse foreign exchange movements. 

Redde Northgate was created just before the start of the Covid-19 pandemic through a merger between accident management specialist Redde and van hire business Northgate.

The group offers ‘whole lifecycle’ services to vehicle rental customers, including disposal, repair and maintenance, legal representation, and insurance mobility.

It employs more than 7,000 people to manage a fleet exceeding 130,000 vehicles from over 170 outlets across Spain and the British Isles.