Profits rise, says TAS

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Profits rise, says TAS

Profits in the UK bus industry rose in 2013/14, according to a recent report from TAS Publications, the publishing arm of Preston based consultants The TAS Partnership. This brings to an end a run of three consecutive years of falls. Entitled ‘Bus Industry Performance 2015’, it presents the results of its annual analysis of 120 local bus companies around the UK in what is the 24th year of the firm’s ‘Bus Industry Monitor Project’. However, revenue grew by less than inflation, the authors say, pointing to growth of 1.2% at a time when inflation was still running at around 2.5%. Operating costs rose 0.6%, helped by falling fuel prices.

Turnover across the companies analysed rose to £5,500m, whilst operating costs reached £5,131m. Operating profit was £369m, up by 9.6%. Operating margins recovered to 6.7%, up from 6.2% in the previous year and back to the levels recorded in 2011/12. Companies outside London saw a larger 2.3% increase in turnover, taking the total to £3,745m, whilst operating costs rose by 1.9% to £3,460m. Operating profit was 8.2% higher at £285m, whilst operating margins improved to 7.6%, from 7.2% in 2012/13. However, they remained short of the previous year’s 8.8%. The report provides an updated estimate of the levels of profits operators need in order to meet their financial obligations and invest for the future. The model suggests that the required margins are between 9.9% and 10.3%, which the Partnership says are well above the levels currently being earned.

Editor of the report, Chris Cheek, said, ‘At a time of uncertainty prompted by savage cuts in spending on tendered services and the new Buses Bill, there is some good news from this report, in that profit levels seem to have stopped falling. However, with revenue continuing to fall in real terms, and signs that real term labour costs are beginning to rise once more, the financial outlook for the industry remains extremely challenging.’

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