Stagecoach passengers continue to grow
Passenger numbers on Stagecoach’s buses have continued to grow, according to the company’s interim results for the six months ended 31 October 2014. At Group level, revenue was up to £1,545m (2013: 1,473.9m) during the period. Its total operating profit was £123.5m (2013: £120.1m), whilst earnings per share before intangible asset expenses and exceptional items were 3.4% higher at 15.1p (2013: 14.6p).
Stagecoach’s UK Bus (regional operations) achieved revenue of £527.1m (2013: £504.3m), representing a 4.5% rise. Its operating profit was up 0.5%, at £77.3m (2013: £76.9m). The company reported a growth in passenger volume. The reported operating profit includes a significant year-on-year reduction in the profitability of its Manchester bus business, which partly reflects the competitive effects of changes in fares and increased bus services in the market. Despite this, overall profitability was maintained by the Division as a whole and it is confident that over the longer term it will compete successfully in each of the UK regions in which it operates. In the results, the Group said it was ‘disappointed but not surprised’ at the decision by the North East Combined Authority in October to refer proposals to implement a bus contracting system in Tyne and Wear to a Quality Contracts Review Board. It also announced its opposition to the Labour Party’s commitment to give city and county regions more power over their public transport networks in its manifesto for the 2015 UK General Election. However, its outlook for its bus operations remains positive.
Revenue and like for like revenue in Stagecoach’s London bus operations was £131.3m (2013: £115.4m), up 13.8%, whilst operating profit rose 6.3% to £10.2m (2013: £9.6m). One interesting development in the period was the sale of a depot in the capital it acquired with its London bus business in 2010. The site was originally mothballed, but was later made available to the UK Bus (regional operations) Division to support the delivery of its contract work for the Olympics. In November 2014, sale of the depot for £5m was completed. The level of bus mileage contracted by TfL across the market is ‘relatively stable’. Given that and in light of the competitive market for London bus contracts, Stagecoach does not expect any growth in its London Bus operating profit to be significant over the next few years.
Chief Executive, Martin Griffiths, said, ‘These are a good set of results, reflecting the strength of our businesses in the UK, mainland Europe and North America. Strong partnerships between transport operators and central and local government are the best way to maximise the value in public transport for our communities and for our regional economies. Despite facing a number of challenges, our sector-leading commercial bus operations in the UK have continued to grow, helping support the economies of some of the country’s biggest city regions. Working with other bus companies and building on our existing multi-million pound digital strategy, we are planning to introduce smart multi-operator ticketing in key city regions during 2015. This transformational initiative demonstrates what can be achieved at local community level without the need for costly and unnecessary regulatory change. Our megabus.com branded coach services in the UK, mainland Europe and North America have helped create hundreds of new jobs.’
‘Overall the Group is in excellent financial shape and we are well placed to drive value through new opportunities in our core bus and rail markets. While we have changed our view of the likely divisional mix of profit for the year ending 30 April 2015, with lower expected operating profit from our regional UK Bus and North America businesses broadly offset by other areas, we remain on course to achieve our expected adjusted earnings per share for the year.’