National Express revs up for better performance

TRANSPORT group National Express yesterday said it expected first-half profits to improve compared with the same period last year, and said ongoing cost-cutting would bolster its performance beyond this year.

The group said it traded in line with expectations in the second quarter, with its business benefiting from improved margins at its rail business after withdrawal from the lossmaking East Coast franchise between Edinburgh and London.

"First-half normalised profit before tax is expected to show good progress over the prior year," said the company in a pre-close trading update.

National Express, which fought off takeover approaches from the Cosmen family, private equity and Perth-based Stagecoach group last year, said: "Revenue trends have been resilient, whilst progress on cost-saving programmes and delivery of a stronger operational focus has accelerated."

National, best known for its scheduled coach services and rail franchises, said underlying revenues at its coach unit were up 3 per cent, but first-half profit margins will be dented by increased investment.

However, margins were set to recover in the second half, the company said.

"The initiatives we have put in place will progressively improve our performance from the second half-year onwards, driving earnings and cash-generation," said Dean Finch, National's chief executive.

The group, which also operates yellow school buses in North America and coaches and buses in Spain, said it will complete its refinancing ahead of schedule after receiving commitments from banks to provide an unsecured 500 million credit facility to 2014.

Shares in National, which reports its results on 29 July, closed down 7p at 219.90p.