Perth-based rail and bus giant Stagecoach Group said its revenue rose to just over £2 billion in the half-year ended October 29 from £1.97 billion for the same period last year but statutory profit before tax fell slightly to £89.5 million from £90.8 million.

“Across all of our divisions, we have continued to see subdued revenue trends relative to the stronger growth we have delivered over the last 10 years or so,” said Stagecoach.

“In the UK and North America, we have seen revenue growth in both the bus and rail sectors affected by sustained low fuel prices that have resulted in heightened competition from cars and airlines …

“Our expectation of the level of adjusted earnings per share for the full year to 29 April 2017 is broadly unchanged.

“We have updated our view of the mix of profits for the year, taking a more cautious view on the short-term outlook for revenue trends in our UK Bus (regional operations) Division, broadly offset by improved forecasts for UK Rail as well as finance and tax costs.”

Stagecoach’s UK rail businesses produced just more than half of its revenue in the first half.

In UK rail, Stagecoach runs the South West Trains, Island Line and East Midlands Trains networks and has a 49% shareholding in Virgin Rail Group, which operates the West Coast rail franchise and a 90% shareholding in Virgin Trains East Coast, which operates the East Coast rail franchise. 

Stagecoach also operates the Supertram light rail network in Sheffield.

Stagecoach said that while its UK Rail Division exceeded its year-to-date profit target, “poor Network Rail operational performance has contributed to lower than forecast passenger revenue from our rail businesses but income received from Network Rail in respect of that operational performance has helped offset that.”

“However, as expected, profit declined year-on-year, with South West Trains and Virgin Trains East Coast both seeing notably reduced profitability, reflecting passenger revenue growth being insufficient to cover the combination of increased premia payments to Government and movements in operating costs,” said Stagecoach.

Stagecoach chief executive Martin Griffiths said: “We are pleased with the performance of the business in the face of a challenging and uncertain political and economic environment. 

“We have met our expectations of earnings per share for the first half of the year.

“We see positive long-term prospects for public transport and have increased the interim dividend by 8.6%. 

“We have a growth strategy built on continued investment, value-for-money travel and high customer satisfaction and we have made further significant investments to improve our bus and rail services for customers now and in the future.

“There is a large market opportunity for modal shift from cars to public transport against a backdrop of population growth, urbanisation, technological advancements, and increasing pressure to tackle road congestion and improve air quality.

“We remain confident that we can continue to deliver long-term value to our customers and shareholders. 

“The prospects for growth in public transport in the UK and North America remain good and we are continuing to invest to ensure that our businesses are a central part of that growth.”