Stagecoach revenue up 20% to £3.8bn

Stagecoach chief executive Martin Griffiths

Perth-based rail and bus giant Stagecoach Group said its revenue for the year to April rose more than 20% to £3.8 billion and profit before tax excluding exceptional items rose £2.4 million to £187.4 million.

Stagecoach said it agreed to sell the retail operations of its megabus Europe business — which had an operating loss for the year of £24.1 million — to FlixMobility GmbH.

Stagecoach shares rose about 3% to 224p, giving it a current stock market value of around £1.3 billion.

Although it has little business in Europe outside the UK, Stagecoach said the EU referendum result may lead to continuing economic, consumer and political uncertainty.

Stagecoach said its bus and rail businesses across the UK, mainland Europe and North America had experienced “more challenging trading conditions” in the last six to 12 months.

Reported pre-tax profit fell from £165.2 million to £104.4 million.

Adjusted earnings per share rose 3.7% to 27.7p and dividend per share rose 8.6% to 11.4p.

Stagecoach operates in the UK, mainland Europe, the United States and Canada, employing 40,000 people and running 13,000 buses, coaches, trains and trams.

Stagecoach’s UK rail businesses include South West Trains, East Midlands Trains, a 49% shareholding in Virgin Rail Group, which operates the West Coast rail franchise, and a 90% shareholding in Virgin Trains East Coast.

Stagecoach chief executive Martin Griffiths said: “These are a solid set of results, with further revenue and underlying profit growth.  

“We are experienced at managing the challenges we face, and the improvements and changes we are making now should ensure that we continue to have a strong portfolio of sustainable and growing businesses for the long-term …

“We have confirmed the sale to FlixBus of the retailing part of megabus Europe. I am pleased that we will continue to operate a number of European inter-city coach services as a contractor to FlixBus and we hope to build on that new relationship.

“In North America, we have taken steps to match our megabus.com inter-city coach services to changing patterns of demand and we are well placed to expand our networks as conditions improve.

“We note the result of the recent referendum in favour of the UK leaving the European Union. 

“As with other businesses, we are closely following developments in this area. 

“Although we have little business in Europe outside the UK, we acknowledge the referendum result may lead to continuing economic, consumer and political uncertainty.

“Like other business sectors, we are affected by reduced public spending and factors in the wider economy, such as weakening consumer confidence and slowing growth in both UK GDP and real earnings. 

“Public transport also faces the challenge from sustained lower fuel prices, the related effects of car and air competition, as well as traveller concerns over global security.  

“Nevertheless, we have experienced management teams who are working hard to stimulate growth and we have not significantly revised our expectation of 2016/17 adjusted earnings per share.

“We remain positive on the long-term prospects for public transport and the group remains in a strong financial position.”

Full Stagecoach results here: http://otp.investis.com/clients/uk/stagecoach/rns/regulatory-story.aspx?cid=273&newsid=745647

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