FUALSA has proved to be a good buy for Northgate, helping send the van hire group's profits into overdrive.

Darlington's only plc said its Spanish subsidiary showed continued excellent performance as overall group pre-tax profits rose 22.1 per cent to £44.7m.

Northgate raised its stake in Fualsa in May from 40 per cent to take complete ownership.

The company said the UK market was relatively mature with ten per cent of vehicles rented, compared with only 1.5 per cent in Spain.

Northgate financial director Ged Murray said: "It is that immaturity in the market place that is giving us the opportunity to expand our business."

Chairman Michael Waring said: "Although the UK remains our core market, it is particularly pleasing that our first venture into Continental Europe, the acquisition of Fualsa in Spain, has proved to be such as success."

The company said it was on course to achieve most of the targets it set itself when it announced a three-year growth strategy last July.

By April 2006, the group plans to expand its fleet size to 60,000 in the UK and 18,000 in Spain.

It also hopes to take its network to 100 locations in the UK and 20 in Spain.

The strategy also identified 100 per cent ownership of Fualsa and establising a portfolio of non-rental products as key objectives.

Northgate, which hires out more white vans and other commercial vehicles than any other company in the UK, last night said it was unlikely to hit the UK fleet target in time, but was confident it would eventually reach 60,000. It currently stands at 47,400, up from 45,000 last year.

But its strong Spanish growth will more than compensate, with its fleet up 25 per cent, or 3,000, to 15,000 in the past 12 months.

Northgate operates from 70 UK branches, which trade under local brand names, such as Maincrest Vehicle Hire, in Liverpool, and Three Counties Self Drive, in Milton Keynes. It has 12 branches in Spain.

It employs more than 1,600 people, including 250 in the North-East, and has 10,000 customers in the UK, ranging from local tradesmen to companies such as distributor TNT and delivery company Parcelforce.