STAGECOACH has reported a sharp year-on-year fall in revenues in its North American business, with lower fuel prices causing people to make more journeys by car rather than bus.
However, the Perth-based transport company reported strong growth in revenues in its UK rail division. And it said that recent trading, overall, had been consistent with its expectations.
Shares in Stagecoach fell 9.2p or 2.5 per cent to 365p in the wake of yesterday’s trading statement.
Stagecoach said that revenues in its North American coach and bus business in the three months to July 31 were down by 5.3 per cent on the same period of last year on a like-for-like basis.
Against a backdrop of low crude oil and cheaper gasoline prices, Stagecoach noted that its Megabus.com operations in North America had recorded a 3.4 per cent year-on-year fall in revenue during the latest three-month period.
The rest of its North American operations saw a six per cent year-on-year fall in revenues in the three months to July 31, although Stagecoach said trading in these operations had been “broadly in line with expectations”.
A spokesman for Stagecoach said: “The period we are in at the moment, if you are looking on a historic basis, is [one of] very, very low oil prices. Our product, Megabus, offers very competitive inter-city coach connections to round about 130 different locations across North America.
“The…cost of motoring has come down quite significantly over the past year, so consumers have choices in how they complete their journeys. It is an area we are obviously very focused on.”
Stagecoach said it continued to see “a number of ongoing challenges to growing profit” in its North American division. It added that it had revised down its expectation of operating profit in North America for the year to April 30, 2016.
The operating profit of Stagecoach’s North American division in the year to April 2015 was $35.3m.
FirstGroup has also revealed the impact of lower fuel prices on the revenues of its Greyhound coach business in North America.
Stagecoach said that there was no change to the adjusted earnings per share that it was anticipating for its financial year to April 2016.
The City is predicting Stagecoach will make underlying pre-tax profits of £210 million in the year to April 2016, up from £185m in the prior financial year. It is forecasting Stagecoach will make adjusted earnings per share of 29.5p in the year to April 2016, up from 26.7p in the prior 12 months.
Stagecoach will, in the 12 months to April 30, 2016, have a full year’s contribution from the Virgin Trains East Coast rail franchise, which operates between Edinburgh and London.
The Perth-based company has a 90 per cent stake in this operation, with Sir Richard Branson’s Virgin Group holding the remaining 10 per cent. Stagecoach and Virgin took over the running of the East Coast franchise from March 1 this year.
Revenues in Stagecoach’s UK rail division, which takes in South West Trains and East Midlands Trains, were in the 12 weeks to July 25 up by 5.5 per cent on the same period of last year on a like-for-like basis
Noting this comparison did not include the contribution from the East Coast Main Line operation, Stagecoach added: “In addition to the like-for-like revenue growth of 5.5 per cent, overall reported revenue increased substantially year-on-year in the 12 weeks due to the inclusion of the new Virgin Trains East Coast franchise.”
Stagecoach noted that Virgin Rail Group, the operator of the West Coast Main Line franchise, had meanwhile achieved a 7.5 per cent year-on-year rise in revenues during the 12 weeks to July 25. Stagecoach has a 49 per cent stake in this venture, with Virgin owning 51 per cent.
In Stagecoach’s UK bus division, outside London, revenues in the 12 weeks to July 25 were up by one per cent on the same period of last year.
Stagecoach signalled that year-on-year growth in its UK bus division had been dampened this summer by the school holidays falling earlier than in 2014.
It said: “We expect stronger growth over August and September as this effect reverses.”
Stagecoach said estimated passenger journey numbers for this division in the 12 weeks to July 25 were down 0.7 per cent on a year earlier. It cited a reduction in concessionary passenger numbers, and attributed this to poor summer weather in various parts of the UK.
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