STUCK in the car park that is much of central Scotland during "rush" hour, you could be forgiven for dismissing industry talk of a mass migration to public transport.
Yet the motorist's attachment to their little (or not so little) home on wheels
is being shattered by soaring fuel costs and an increasingly vocal green lobby.
Petrol and diesel prices may have come off the boil in the past few weeks, but they remain stubbornly above £1 a litre.
Filling up the tank is a big strain on weekly household budgets already under pressure from rising energy and food bills.
Throw in the demonisation of the motor car by those on high and it's no surprise to learn that car usage is being curbed.
What's bad news for motor dealerships, though, is proving to be a shot in the arm for Britain's big transport operators.
Industry heavyweights National Express, FirstGroup and Stagecoach are seeing passenger numbers take off as cash-strapped travellers make the shift to buses and trains.
Arriva's first-half results, released yesterday, provide further evidence of that accelerated switch to public transit.
The group, which runs more than 16,000 buses and trains across the UK and Europe, posted a 40 per cent hike in pre-tax profits on the back of rising demand for its bus operations and a maiden contribution from the sprawling CrossCountry rail franchise.
Overall, group revenues were 59 per cent ahead at £1.44 billion, with profits up to £66.3 million from £47.3m a year earlier – figures that were ahead of City hopes and cheered by investors, with the shares gaining a useful 4 per cent.
Of course, transport companies have to foot some pretty hefty fuel bills of their own.
A point not lost on Arriva boss David Martin yesterday as he warned of the impact on the company's cost base.
However, he added that fuel costs this year were "substantially fixed" and stressed that "tougher" economic conditions "bring with them the possibility of higher demand for our transport solutions".
During the first half, Arriva carried 2 per cent more passengers on its UK bus services, in cities such as London, Glasgow, Newcastle and Liverpool.
Meanwhile, operating profit in the UK rail division leapt to £14.8m from £1.1m, aided by passenger growth, higher ticket prices and the first contribution from CrossCountry, which links Penzance to Aberdeen and Stansted to Cardiff.
Analysts warmed to Arriva's half-year performance.
"Results were slightly ahead of our forecasts due to the better-than-expected performance of the UK bus division," noted Gert Zonneveld at Panmure Gordon.
Collins Stewart, which reckons Arriva is "fair value" in a sector trading at a 16 per cent discount to the sum-of-the-parts, described the results as a "positive read-across for the sector".
Analyst Andrew Fitchie said: "We expect a run of positive news from the sector over the next two weeks, all reiterating the positive trends Arriva has reported."
Recent research by Collins Stewart highlighted the potential for a modal switch from car to public transport, helping to offset those fuel pressures.
The broker believes, that should this trend continue, operators will enjoy "incremental revenue and margin growth".
Good news for investors looking for some resilience amid the current market volatility. Collins Stewart rates Arriva a "hold". However, with a "buy" recommendation, its preferred sector pick is Aberdeen-based FirstGroup.
JOHN Lewis failed to make it three in a row yesterday when it followed up a fortnight of positive sales news with a 4.2 per cent dip in takings.
As always, the headline figure disguised contrasting fortunes across the 26-strong department store estate.
While the flagship London Oxford Street outlet produced the best performance of last week, with sales ahead 6 per cent on a year earlier, the three Scottish stores were down by between 0.5 and 6.2 per cent with Peterborough – in 26th place – nursing an 18.2 per cent fall.
From the group's accompanying commentary it would appear that the distraction to shoppers of the Beijing Olympics and summer school examination results impacted on performance.
Makes a change from blaming the weather.
RUMOUR OF THE DAY
RBS to get Deutsche Bahn on trackROYAL Bank of Scotland is among the banks that have been lined up to help Deutsche Bahn, the German national rail company, to float on the Frankfurt stock market, a source yesterday said.
ABN Amro, Citigroup and Credit Suisse have also been added to the consortium as well as co-managers Commerzbank, DZ Bank, WestLB, BNP Paribas and Merrill Lynch, the source said.
The source added that 27 October was being planned as the first day of trading for shares in Deutsche Bahn after its initial public offering.
In May, Deutsche Bahn had already selected Deutsche Bank, Goldman Sachs, Morgan Stanley and UBS as lead managers. In addition, Dresdner Bank was selected to handle marketing to retail investors and Daiwa for work in the Japanese market.
SMALL BUT BEAUTIFUL
BCS moves into profit as it slashes operating costsOPERATING expenses at Business Control Solutions (BCS) fell by 28 per cent in the first half of the company's financial year, allowing it to record a pre-tax profit.
Turnover at BCS, which writes financial software, fell by 2 per cent but the company still managed to record a pre-tax profit of £29,000 in the six month to 30 June.
During the same period last year, the company made a pre-tax loss of £425,000. BCS shaved £602,000 from its operating expenses, but revenue also fell from £4.66 million to £4.55m.
Nigel Walder, chief executive of BCS, which has a market cap of about £5m, said: "We expect market conditions to remain challenging as we move through the second half of the year for our consulting and software businesses.
"However, our client base, diversified portfolio and current sales pipeline provide us with confidence that we will be able to successfully navigate our way through these challenging market conditions."
BCS – which is based in London and has development centres in Peterborough and Romania – lists six of the world's ten largest banks among its clients, including Deutsche Bank.
The full article contains 1048 words and appears in The Scotsman newspaper.
