National Express hikes dividend 10% as focus moves away from UK

Revenue for National Express rose in 2016 partly due to the North America business and recent acquisitions while the bus operator remains confident in its outlook as it hiked its dividend by 10%.

For 2016, revenue increase 20%, or 10.6% on a constant currency basis, to £2.1bn, compared to last year, which resulted in operating profit of £219m, up 14.2% or 4.8% at constant currency.

This was partly due to “strong growth” in the North America business with revenue and operating profit up 14.3% and 11.9%, respectively at constant currency.

The recent sale of the rail business means the UK business is now just over a quarter of group sales, with bus sales down £2m and coach sales up £1m.

Group pre-tax profit climbed 14.6% to £170.1m with an earnings per share increase of 16.7% to 27.3p.

At the end of the year, the FTSE 250 company had a free cash flow of £138.6m, up from £111m, and net debt of £878m, up from £745.5m.

National Express hiked its final dividend 10% to 8.41p, which lifted the full year dividend up 8.4% to 12.28p.

On 10 February, the company sold its Essex Thameside c2c rail business to Trenitalia, the passenger rail company part of FS Italiane Group.

During the year, NEX also made 11 acquisitions which are expected to be accretive in the first 12 months of ownership, this includes eight bolt-on acquisitions in North America, a bus business in Spain, a private hire transfer business in Switzerland and coach business in the UK.

Chief executive Dean Finch said: "Our focus on operational excellence is helping drive organic growth across the group, and this is being complemented by significant returns from our recent acquisitions. We carried a record 921m passengers in 2016 and will continue to invest in new technology to deliver ever-improving services to our customers.

"With the recent sale of our c2c franchise, we have further opportunity to invest in our fastest growing markets which deliver strong returns, but we will continue to do so in a disciplined manner. We have developed a strong track record and team in identifying and completing acquisitions that generate significant value and we have identified a strong pipeline of further opportunities."

Shares in National Express were up 3.43% to 353.53p at 0822 GMT.