Northgate, the light commercial
vehicle rental business, has revealed that in the past few months
its residual values have declined by up to 10 per cent. It plans to
reflect this decline by way of a higher depreciation charge.
The company, which does LCV rental
both in the UK and Spain, will publish its new interim results in
the second week of December, but has warned that the more
challenging economic conditions could affect its next
performance.
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However, it said its business model
offered the flexibility to “de-fleet rapidly” and return to a
strong financial position when markets improved.
The company said that the market in
the UK has had a reduction in residual values of between 5 and 10
percent, which will increase depreciation charges compared with
last year.
In Spain, residual values since
year-end 2007 have also declined by up to 10 percent, which the
company said reflected the tough conditions affecting the Spanish
economy.
It hopes to overcome difficulties it
faces in Spain by developing an export capability, which would
greatly reduce its dependency on the internal market.
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By GlobalDataThe company said its trading outlook
for the current year is lower than its previous expectations, and
that the challenging trading environment will be similar to the one
seen in the UK in the early 1990s.
Looking forward, however, it was
optimistic about how this could affect its operations, explaining
that “if recession takes hold and capital becomes increasingly
constrained, companies will look at rental as an option for
acquiring their fleet”.
Northgate has also renewed and
reprofiled the majority of its banking facilities, with only £79
million of facilities now maturing by December 2009, compared with
£769 prior to the renewal.
In August 2009, Paul Tallentire will
replace Steve Smith as the CEO of Northgate. In the meantime,
Tallentire will hold the position of deputy chief executive within
the company.
