Stagecoach half year results

In its preliminary results for the half year ending 29 October 2016, Stagecoach Group’s revenue amounted to £2,002.1m (H1 2016: £1,970.4m). Its total operating profit was £117m (H1 2016: £144.6m) and its profit before taxation was £100.4m (H1 2016: £121.5m).

In Stagecoach’s regional UK Bus operations, its revenue fell 1.6% to £513.9m (H1 2016: £522.4m). Its operating profit was £66.6m (H1 2016: £71.9m), a 7.4% decrease. The prior year figures for the UK Bus (regional operations) Division have been restated to exclude megabus Europe, which Stagecoach sold to Flixbus in June this year. Its total like-for-like passenger journeys fell 1.5%. It continues to expect subdued revenue trends from its local bus services in the short term and has updated the division’s forecasts for the current financial year to reflect that.

In Stagecoach’s London bus division, revenue fell 1.2% to £131.5m (H1 2016: £133.1m). its operating profit fell 9%, amounting to £9.1m (H1 2016: £10m). Although fuel costs in this part of the operator’s business have reduced year on year, there is an offsetting effect from the impact of lower fuel costs on the indexation of contract revenue. Staff and other costs have continued to rise as a proportion of revenue.

Commenting on the results, 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.’

Also commenting on the figures, Joshua Raymond from market analysis and trading services, said, ‘Overall it’s a mixed bag of earnings. On the bright side, the firm remains optimistic about UK bus network going forward and has performed resiliently in face of growing competition and huge problems on the rail network especially. However, the contraction in margins remains a problem. The expected rising in inflation in the UK is expected to hurt real earnings growth for consumers and this could force them back to public transport in the near future, which should benefit Stagecoach.’

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