Ogilvie proves fleet of foot with car lease arm driving profits

Ogilvie Group’s expanding vehicle leasing business helped it build turnover and profits in its past financial year despite the tough environment facing its core construction markets.

The Stirling-based group achieved near-8 per cent increases in both turnover and profit in the year to 30 June, as buoyant second-hand car values helped it to make money from its fleet of 10,500 cars and vans.

Finance director John Watson said second-hand car prices were key to the fleet division’s success because the company sold on its vehicles after leasing them to businesses for four to five years.

The 60-year-old privately-owned company cut staff at its construction arm following the financial crisis and recession and has since concentrated investment on the growing fleet business.

Watson said: “Fleet is at a high point in its cycle at a time when housebuilding and construction is at a low point.”

He said Ogilvie was now among the 20 largest contract hire firms in the UK.

The company recently announced plans to grow its vehicle leasing arm by 1,500 cars and vans after switching from Royal Bank of Scotland to Barclays.

Ogilvie was enticed away from RBS after 12 years with the lender by an offer of extra funding that will see it own 12,000 vehicles. It will also invest £750,000 in IT for the leasing business.

The company said yesterday that continued lack of public capital projects, particularly in the health and education sectors, contributed to difficult conditions for Ogilvie Construction. However, the business continues to target key clients in the private sector to secure negotiated contracts.

It added: “Like most residential developers, Ogilvie Homes has seen the lack of consumer confidence, combined with constraints in the mortgage market, impacting on sales. It is expected that the market will recover slowly with the anticipated easing of mortgage availability in the first-time buyer market.”

Despite the difficult environment, group turnover reached £162.7 million in the year to June, up from £151m the year before. Pre-tax profit at the family-owned firm, which employs 402 people across its various business operations, was £2.7m, compared to £2.5m in the previous 12 months.

Chief executive Duncan Ogilvie said: “We have continued to maintain a solid performance in what are difficult economic conditions and expect that consistency to continue into the coming year.”

Watson said that, although the outlook for construction remained difficult, the firm was confident it could “tough it out”.

He said Ogilvie Homes had worked on a government-backed shared equity scheme in Livingston and expected to secure more contracts on such projects in the current financial year.

Ogilvie’s smallest division, its IT and communications arm, was loss making last year as companies cut back on non-essential work, but Watson said it should “turn a corner” in the current year and get back into the black.

Andy Hall, head of business development for Barclays Corporate in Scotland, said: “It seemed to us that providing more capacity to help Ogilvie play its part in sector recovery was a decision justified by their track record and strong balance sheet.”