Stagecoach confident as it drives up profit

Published on Wednesday 25 June 2008 10:29

BUS and train operator Stagecoach said fears over climate change and higher fuel costs were driving people towards public transport, as it unveiled full-year pre-tax profits were up eight per cent to £174.4 million.

The Perth-based firm reported like-for-like revenues up 13.6 per cent at its train arm – which includes South West Trains and East Midland Trains – and 7.5 per cent at its UK bus division.

Group revenues for the year were up 17.2 per cent at 1.76 billion. The stronger performance came from rail, which showed 36 per cent growth over the 12-month period.

Operating profit at its UK bus division was up 14.8 per cent, from 84.5m to 109.9m, while its UK retail division showed operating profit up 7.6 per cent from 58.8m to 59.1m.

The company's performance in North America was said to be ahead of schedule, with like-for-like revenue up 4.6 per cent and the continuing expansion of its budget inter-city coach service megabus.com.

Chairman Robert Speirs said the board was confident for the future prospects of the group, with the new financial year seeing trading continue in line with expectation.

And he expected demand for public transport to increase in future.

"We believe the combination of increased road congestion, rising public concern about environmental matters and higher fuel prices will further boost demand for public transport," he said.

In a separate report, the company revealed consumer concerns about the environment and health were helping to shift passengers from car travel to greener public transport.

More than ten per cent of the 4000 people surveyed by the Stagecoach Group had changed their mode of transport in the last three years. Of those who had previously used the car, 36 per cent had switched to the bus, 30 per cent now walked and five per cent changed to travel by train.

Brian Souter, Stagecoach Group chief executive, said: "With increasing car congestion and high fuel prices, we are starting to see a fundamental shift towards public transport. We believe there is significant opportunity to attract more people to greener smarter travel to help them reduce their carbon footprint and tackle the challenge of climate change."

The company expects its own fuel costs to rise by nearly 25 per cent to 140m over the next year, if prices remain at current levels.

Finance director Martin Griffiths said the company's costs would go up with the soaring oil price, but added that the counter effect of those abandoning their cars for public transport would help to offset the problem.

"Our costs like everyone else's will go up... (but] the net overall effect will be positive," he said.

Around two million UK passengers travel on Stagecoach buses every day in around 100 towns and cities in the UK.