Redde Northgate profit rises following merger, higher vehicle sales


Commercial vehicle hire company Redde Northgate posted a rise in first-half profit, buoyed by merger activity and higher vehicle sales.

Pre-tax profit for the six months through September rose 4.3% to £25.9 million, as revenue jumped 53% to £556.0 million.

The combined company was formed on 21 February when Northgate acquired accident support group Redde, adding £181.3 million of revenue in the first half.

Revenue from the standalone Northgate business rose 5.2% to £376.5 million, after a 6.2% fall in hire revenue was offset by a 38% rise in vehicle sales.

Redde Northgate declared an interim dividend of 3.4p per share, down from 6.3p year-on-year.

The company said the payout was in line with a policy stated at the time of the merger to pay an interim dividend that was half of the prior final dividend.

'Since our preliminary year end results announcement on 16 September we have continued to make excellent progress in delivering on our strategy to become the leading integrated mobility solutions provider,' chief executive Martin Ward said.

'Our integration plan has now delivered synergies and permanent cost savings of £15.9 million run rate savings to date and we fully expect to reach the increased targets we set out of £19 million in year two.'

'We can clearly see the impact of Covid-19 in this set of results, particularly in Redde where accident volumes were depressed in the first quarter.'

'However, these have significant potential to increase when road traffic volumes and incidents revert back closer to historic norms.'

'Meanwhile, the buoyancy in used vehicle markets, particularly in the UK, has led to higher disposal profits, and the Northgate businesses have also both benefitted from an increase in VOH since year-end such that VOH is now above pre-Covid levels.'

'Recent regional lockdowns and the second national lockdown in the UK have highlighted the need for agility and we continue to keep cost and cash controls in place in order to monitor and manage the business closely.'

'We currently do not expect the impact of these new lockdowns to be as severe as the original national lockdowns in April and May.'

'We are confident on performance in the 2021 financial year and our views on the 2022 financial year will be determined by the exit run rate we see at the end of the 2021 financial year.'

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