Economic gloom hits van hire firm

VAN rental firm Northgate yesterday warned that economic gloom in the UK and Spain would send profits tumbling by half this year.

The company has been hit by a double blow of falling demand for its 134,000-strong rental fleet as well as plunging vehicle values in the second-hand market.

Northgate said yesterday that underlying profits fell 40 per cent to 26.5 million in the six months to 31 October, and it expected annual profits of around half last year's 83.1M in "difficult and uncertain" markets.

The deteriorating conditions in the UK and Spain had "impacted significantly" on the business during a period in which more than 10 per cent of Northgate's fleet lay idle .

Northgate has embarked on a cost-cutting programme which will result in 380 jobs being axed by next April, amounting to around 11 per cent of the workforce. The majority of the job losses will fall in the UK.