Vehicle hire firm Redde Northgate says demand for vans has outstripped supply as insurance and leasing contracts have helped drive growth.
The Darlington-based operator, which specialises in supplying replacement commercial vehicles for customers who have experienced an accident or breakdown, reported a near 20% rise in revenue in the 12 months to the end of April, to £1.49bn, as well as a 9.7% rise in pre-tax profits to £178.1m. Investors on the London Stock Exchange were told Redde has increased its fleet by 3% to 130,000 and that a scarcity of light commercial vehicles had supported values but held back potential rental growth.
Performance was strongest across the group's operation in northern Spain where revenue attached to vehicle hire and vehicle rental grew 14.6% and 24% respectively. Redde said the country's strong economic growth had contributed to increased demand and that its main concern was sourcing vehicles to satisfy orders in sectors such as infrastructure and support services.
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Speaking to BusinessLive, Redde chief executive Martin Ward hinted there may be future merger and acquisition activity in Spain where the group sees opportunity following six successful deals in the UK.
Meanwhile, in the UK, some price rises were introduced to combat inflation as rental revenue grew 6%. And the group's other services such as fleet and accident management and telematics also saw growth. This year a major leasing contract with a blue chip customer - said to have one of the country's largest fleets - is set to begin this Autumn.
However, profits on disposals of vehicles decreased 15.8% to £37.8m, which Redde said reflected the reduction in the number of vehicles sold and softening residual values, which are still expected to remain above pre-Covid levels. The acquisitions of traffic management vehicle supplier Blakedale and chilled and frozen delivery van rental specialist FridgeXpress were said to have delivered growth, with both businesses seeing a rise in new customers.
Mr Ward 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. Our integrated mobility platform has helped to drive growth and offers significant efficiencies for ourselves and customers. Vehicle supply is improving but remains below the high levels of customer demand; our financial strength provides an ability to react quickly to supply opportunities as they arise.
"Our acquisitions of two specialist vehicle providers since the start of FY2023 have taken us into new areas and broadened our UK rental customer base and we continue to review other exciting growth opportunities. The group fleet is over 130,000 vehicles and multi-year insurer contracts are now at full run-rate. Together with our strong pipeline of new business including an additional large leasing company multi-service contract due to go live in the autumn, we are confident in continuing to deliver further stakeholder value."
Redde Northgate now operates more than 170 branches in the UK, Ireland and Spain, and employs a team of 7,000 looking after 700,000 managed vehicles.
