Rise in bus use drives up Stagecoach profits

Published on Wednesday 24 June 2009 10:22

COMMUTERS turning to bus travel to save money have helped Scottish transport provider Stagecoach deliver a strong upturn in revenues.

The firm said that its UK bus division, which includes the budget Megabus services, had seen like-for-like revenues grow by 8.9 per cent.

Like-for-like revenues in UK rail increased by 6.2 per cent, although operating profit in the division fell by 3.4 million to 55.7m. Despite admitting that the rail sector is facing a "challenging operating environment", Stagecoach said it "continues to believe that rail is an attractive mode of travel".

Overall pre-tax profits in the year to the end of April for the Perth firm increased by 13 per cent to 196.4m.

Co-founder and chief executive Brian Souter said: "We have delivered strong revenue and profit growth despite the challenging economic environment.

"Our bus operations are performing well. We have made targeted complementary acquisitions that support our successful organic growth strategy and we have a flexible and successful business model.

"While our rail operations are more sensitive to the macroeconomic cycle, we have acted quickly to protect our businesses. We have delivered a major cost reduction programme at our rail franchises and are implementing measures to protect passenger revenue and attract new customers."

Total group revenues in the period increased by 19 per cent to 2.1 billion. It has recently been expanding in North America, which now accounts for more than a tenth of total revenues.

The firm said that trading in the current year, since April 30, had been in line with expectations, but said that it would "continue to monitor macroeconomic developments closely, particularly their impact on our UK rail division".

Mr Souter said the could provide opportunities for "dynamic companies like Stagecoach that are driven by innovation".

"Issues around congestion and climate change are becoming more immediate and public transport is central to a low-carbon economy," he said.

Within its UK bus division, revenues increased by 11.7 per cent to 830.8m, while operating profits increased to 125.6m, compared to 109.9m a year earlier.

It said that its operating margin increased, reflecting the "continued strong revenue growth and a rigorous focus on cost control".

Total UK rail revenues increased by 25.7 per cent, to 977.7m. When the impact of the acquisition of East Midland Trains is stripped out, like-for-like revenues increased by 6.2 per cent.

"There is no doubt the transport sector faces a challenging year ahead," said Mr Souter. "But I believe Stagecoach is well placed to withstand the economic headwinds. We have a record of being able to respond quickly to the changing business environment."