STAGECOACH has reported solid year-on-year growth in revenues across its UK bus and rail and North American operations, and declared that it remains on track to meet its earnings expectations for the year to April 30.
The Perth-based company, updating the City yesterday on its trading during the 40 weeks to February 1, also highlighted its continuing excitement about further expanding its megabus.com long-distance coach operations in Europe.
It flagged its ambitions in this regard as it said that it now expected net start-up losses of around £5 million for its financial year to April 30 from this move to expand megabus.com, which is now operating in France, Belgium, the Netherlands, Luxembourg , Spain and Germany.
It added that it expected further losses in its next financial year from the continued expansion of megabus.com in Europe as it developed "this significant opportunity". In this context, a Stagecoach spokesman noted opportunities arising from "moves towards liberalisation" of the market in the likes of France and Germany.
Stagecoach, which is chaired by co-founder Sir Brian Souter, told the stock market that the company's overall profitability had "remained satisfactory".
The consensus forecast among analysts is that Stagecoach will make underlying pre-tax profits of about £183m during the year to April 30, , up from £180.7m in the prior 12 months.
The Perth-based company said revenues in its UK bus operations, outside London, were in the 40 weeks to February 1 up by 2.7 per cent on the same period of the prior financial year on a like-for-like basis.
It said that passenger volumes in this period had been up by 0.4 per cent on the same period of the prior financial year. The company acknowledged that rises in fares had played a part in the year-on-year growth in UK bus revenues.
Stagecoach said that, although year-on-year growth in the UK bus division in January had been lower than in previous months, this was largely because of variations in weather compared with the opening month of 2014. It added that it did not believe this weaker year-on-year growth in the UK bus business was indicative of any change in the underlying rates of expansion.
Revenues in Stagecoach's UK rail business, which includes South West Trains, were during the 40 weeks to February 1 up by 7.6 per cent year-on-year.
Stagecoach said its new InterCity East Coast rail franchise, in which it has a 90 per cent stake with Sir Richard Branson's Virgin Group holding the remaining 10 per cent, was "expected to significantly enhance the profitability of the UK rail division in the year ending April 30, 2016 and beyond".
Stagecoach's London bus operations showed a 9.8 per cent year-on-year rise in revenues during the 40 weeks to February 1.
In Stagecoach's Virgin Rail joint venture, which operates the West Coast Main Line franchise, revenues in the 40 weeks to February 1 were up by 6.7 per cent on the same period of the prior financial year. This joint venture is 51 per cent-owned by Virgin, with the remaining 49 per cent held by Stagecoach.
The North American operations of Stagecoach, including Megabus.com, showed a 1.9 per cent year-on-year rise in revenues in the nine months to January 31.
Stagecoach noted that year-on-year growth in revenues in its North American business had recently been lower than that earlier in the financial period. It cited the effect of a significant fall in fuel prices on demand for its services in North America, particularly inter-city coach services on its megabus.com network.
Summing up, Stagecoach said: "Since the announcement in December 2014 of the group's half-year results to October 31, 2014, the overall profitability of the group has remained satisfactory, and there has been no material change to our expected adjusted earnings per share for the year ending 30 April 2015."
It added: "Although there are a number of previously reported challenges to growing profit in the year ending April 30, 2015, overall current trading is satisfactory and we are on course to meet our expectations for the year."
Shares in Stagecoach closed 3.2p or 0.9 per cent higher at 340.8p.
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