STAGECOACH’S shares were badly dented yesterday when the transport group’s guidance saw the City trim its annual profit forecasts as customers shunned journeys to major cities following the deadly terrorist attacks in Paris last month.
The Perth-based operator also revealed that revenues in the opening weeks of the second half of its financial year had been affected by the heavy UK flooding, most notably in Cumbria where it is the biggest bus operator.
Martin Griffiths, Stagecoach’s chief executive, said revenue headwinds were also fuelled by a “general slowdown” in Scotland and the north of England, and the business cutting its Megabus mileage in the United States by 10 per cent as more Americans use their cars as low oil prices continue. The shares fell 14 per cent to close at 304.70p.
The company – which also runs extensive rail services including the West Coast Mainline – said it believed the terrorist attacks that killed 130 people in the French capital on 13 November had hit both its Megabus coach and its rail services, both from Britain to Europe and travel within Britain.
Ross Patterson, group finance director, said: “In the immediate aftermath of the terrorist attacks we saw a slowing of revenue growth in these businesses.
“But it was also noticeable within the UK, mainly on rail, particularly anything going to London on South West Trains [into Waterloo] and the west coast line [into Euston].”
Patterson said weekday rail travel had held up better, but revenues were more affected in “discretionary travel” into London on weekends. Nomura cut its earnings per share forecast by 5 per cent.
Stagecoach said revenue growth had partly recovered over the past week, but added that in the wake of the 11 September, 2001 attacks on the World Trade Center in New York, where the company had extensive operations, revenues took “a few months” to recover.
Griffiths said he felt the stock market reaction was overdone, but that “they are entitled to their view”.
It came as the group posted a fall in half-time pre-tax profits to £90.8 million from £98.3m. The dividend rises to 3.5p from 3.2p. Total group revenues in the six months to end-October rose to £1.97 billion from £1.54bn.
Griffiths also urged public authorities to work harder to stop congestion on Britain’s roads as it was “holding back the potential of the bus”.
He said: “The congestion has been an issue but it is getting worse. We have got running times in Manchester 50 per cent behind schedule. That causes a problem in areas like drivers’ wages. It is not sustainable.”
He added: “Public transport is a shared responsibility between the public and private sectors. It is crucial that the investment of transport operators is matched by steps by the public sector to tackle the growing challenge of road congestion.”