Shares of Perth-based bus and rail giant Stagecoach Group plc rose as much as 12% on Wednesday despite the firm reporting that its revenue fell 43% to £454.6 million in the half year to October 31, 2020.
Statutory profit before tax fell 92% to £5.4 million for the six months.
Stagecoach CEO Martin Griffiths told reporters the share price rise was because investors are relieved that the company is still making a profit in a “radically different climate.”
Griffiths said investors were reassured that “we’re still cash positive” adding that “I expect there is maybe a bit of relief.”
Stagecoach said the fact it made any profit reflected “management actions to respond to COVID-19, and supportive measures by government and local authorities.”
The firm reported a reduction in net debt to £310.8 million from £352.1 million on May 2.
Stagecoach reported “continued substantial available liquidity” with over £850 million “of undrawn, committed bank facilities and available cash/deposits.”
Stagecoach’s “regional” bus business is currently operating around 91% of prior year vehicle mileage “with commercial sales having recovered to almost 60% of prior year levels and now at around 54%, reflecting some tightening of COVID-19 restriction.”
Stagecoach CEO Griffiths added: “While the situation remains fluid, we have made progress in the restoration of our networks to close to pre-COVID levels and in growing passenger volumes safely.
“We have a strong business, with good liquidity, devolved operating companies closely focused on our customers and local communities, and a supportive relationship with government and our local authority partners …
“We welcome the UK, Scottish and Welsh governments’ recognition of the importance of bus and tram services, as evidenced by the sector-specific actions they have taken to support the continuation of vital services during the COVID-19 pandemic.
“We are working closely with our government and sector partners on a new framework to ensure the country’s public transport networks adapt to new working and travel patterns, are fit for the post-COVID world, and meet the continuing needs of our customers and communities …
“I’m confident that with our strong leadership and committed frontline people we can come through the challenge of the COVID-19 pandemic and maximise the significant opportunities for public transport ahead.”
Edison Group director of research Neil Shah said: “Stagecoach have had a torrid 2020 but if the feeling is they’ve weathered it and the vaccine is going to bring us back to some kind of normal activity, that might explain the rise in shares.”