Strong progress for rail sees Stagecoach lift earnings expectations
Stagecoach Group updated the market on its trading for the financial year ending 27 April on Wednesday, reporting that it had seen further strong trading and positive progress in the UK rail division, resulting in an increase in its expectations for adjusted earnings per share since its update in December.
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The FTSE 250 passenger transport operator said it had seen 3.4% like-for-like revenue growth for UK regional buses and 1.3% growth in London bus operations in the 44 weeks ended 2 March, while like-for-like revenue was down 1.4% in North America for the 10 months ended 28 February.
UK Rail like-for-like revenue, excluding the discontinued Virgin Trains East Coast franchise, was ahead 1.4% in the 44 weeks ended 2 March, while Virgin Rail Group revenues were 6.7% higher.
In UK regional bus operations, Stagecoach said revenue growth was similar to that reported in the first half of the year, with tender revenue continuing to grow as the company increased its market share in that area of business.
Like-for-like vehicle miles operated were 0.5% lower than in the previous year, while like-for-like revenue per vehicle mile grew 4.0% and like-for-like revenue per journey also increased 3.6%.
Looking at London buses, Stagecoach said it had undertaken a detailed review to identify opportunities to improve its performance on tenders for Transport for London contracts.
“The bidding environment remains highly competitive and this will continue to exert pressure on the profitability of our UK bus (London) division,” the Stagecoach board said in its statement.
“However, our priority remains securing contracts at a sustainable level where the financial returns reflect the capital invested.”
The like-for-like revenue decline of 1.4% in North America included a 1.9% decline for Megabus in that geography.
Trading at the other businesses in North America remained in line with its expectations, the board said.
“As previously reported, we expect the disposal of the North America Division to complete before the financial year-end.”
Finally, in UK rail and the Virgin Rail Group, Stagecoach said financial performance was ahead of its expectations, with continued good underlying revenue trends.
“We have continued to make progress in achieving favourable outcomes from concluding industry charges and contractual matters associated with the expired South West Trains franchise, resulting in additional profit being recognised in the current financial year.”