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Stagecoach shares up as firm copes well despite poor US and UK weather

SHARES in Perth-based Stagecoach rose 0.6% after its rail and bus operations defied recent poor weather in parts of the UK and United States.

"The overall profitability of the group has remained satisfactory," Stagecoach told investors. "There has been no significant change to our expected adjusted earnings per share for the year ending April 30, 2014, which given the effects of the severe weather in both the UK and North America, reflects the strength in the underlying trading of the business."

Stagecoach posted a 4.6% rise in like-for-like revenues in its UK bus business outside London during the 40 weeks to February 2 after seeing like-for-like passenger volumes rise 1.2%.

At its rail business, revenues rose 3.9% even though its South West Trains franchise running into London was hit by recent wet weather.

Stagecoach said this had "some adverse effect" on its finances in the short term.

"We anticipate that the effect of this on the results for the year will be largely offset by positive underlying trading in the UK rail division as a whole," it added.

Stagecoach, chaired by Sir Brian Souter, said its bid for the currently state-run East Coast Main Line franchise is expected to cost it £5 million this year. Its Megabus coach operation in North America was the fastest growing part of the business, with revenues up 20.3% in the nine months to the end of January.

Stagecoach added: "Overall current trading is satisfactory and given the broad geographical balance of the group, its prospects remain positive."

Gert Zonneveld, analyst at Panmure Gordon, wrote in a note for clients: "The prospects for long-term growth in Stagecoach's passenger transport business, both in bus and rail, remain excellent"

He raised his target price from 380p to 400p.

Stagecoach's shares closed up 2.2p at 384p.

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