Buses are the bedrock says Stagecoach as rail profits dip

By MARTIN FLANAGAN
Published on 26/06/2012 22:49

BUSES remained the “spine” of the Perth-based Stagecoach transport group, founder chief executive Sir Brian Souter claimed on Tuesday, as a £25 million loss at the group’s East Midlands Trains business saw annual profits edge down.

Souter revealed a contrasting strong performance by the group’s Scottish and London bus operations, with profits up 9.6 per cent to £162.7m.

He said Stagecoach was looking at the potential acquisition of some unspecified bus businesses put up for sale by rival FirstGroup, but declined to give their locations because of confidentiality agreements.

“We are good at buying underperforming businesses,” Souter said, citing the turnaround at the London operations bought back in 2010. The London operation, with workers currently negotiating for a bonus for working during the Olympics, made a profit of £13.5m in the year to end-April. That compared with a near-£6m loss last time. Stagecoach’s bus division saw revenues rise 1.8 per cent in the year.

It contrasted with its UK rail division, where profits fell 21.3 per cent to £27m. The company said, however, that East Midlands Trains would be profitable again this year after having now received revenue support payments from the Department for Transport.

Souter said the Megabus expansion in the US continued to go from strength to strength, with North American profits steady at £19.7m.

He added that shareholders should be aware that “UK bus is the spine of the company”, which he said was much more meaningful currently to its stock market valuation than rail.

Stagecoach pre-tax profits fell to £202.5m from £205.7m. The dividend rises 10 per cent to 7.8p from 7.1p, courtesy of a proposed 5.4p final payment.