Stagecoach shares soar as it mulls US sale

UPDATE 2 — Shares of Perth-based bus and rail giant Stagecoach rose at least 15% on Wednesday after it said it is considering a possible sale of all or part of its business in North America and reported adjusted earnings that were ahead of expectations.

Stagecoach reported a £22 million statutory loss for the half-year ended October 27, and revenue that fell to £1.23 billion from 1.79 billion.

However, Stagecoach reported a better-than-expected adjusted profit of £87 million which it said reflected a “positive resolution of contractual matters for the former South West Trains franchise” and strong profitability at Virgin Rail Group.

“Full-year adjusted earnings will reflect the rail out-performance in the first half of the year,” said Stagecoach.

Stagecoach CEO  Martin Griffiths said: “I am pleased to report positive half-year financial results, ahead of expectations.

“Our strategy is designed to grow our core business, to support innovation, and to position the group to benefit from future opportunities.

“We have delivered encouraging results at our UK regional bus business, where we continue to deliver high customer satisfaction.

“Targeted fleet and technology investment is helping to enhance operational delivery and improve cost efficiency. 

“We continue to innovate across a range of areas including autonomous buses, contactless payment, data analytics and demand responsive transport.

“We are well positioned in UK rail, with three live contract bids and more than 20 years’ experience of delivering innovation and investment for customers.

“We welcome the UK Government’s rail review as an opportunity to deliver better value and day-to-day performance for passengers, a partnership structure and contracting system which is sustainable for the long-term, and reform of outdated regulations which are holding back customer-focused improvements.

“While we recognise the competitive challenges in some of our markets in the UK and North America, we are confident that public transport will be central to delivering Government priorities to grow the economy, connect people and communities, reduce road congestion and improve air quality.  

“We are reviewing strategic options for the North America Division and that includes ongoing discussions regarding a possible sale of all or part of the business.

“The group is focused on making further progress in the second half of the year and we have increased our expectation of full-year adjusted earnings per share to reflect the above-forecast rail earnings in the first half of the year.”