Scottish bus giant Stagecoach to reveal progress on road to recovery

Bus giant Stagecoach will reveal the strength of the return of passengers to its services following the easing of lockdown measures when it reports full-year results this week.

Passenger levels have inevitably been hit hard by measures which have led to far fewer journeys, and when it last updated the market in March Stagecoach said sales were down around half compared to normal activity levels.

However, the Perth-headquartered company said it was confident revenue would grow as lockdown restrictions were eased. While it said it was difficult to accurately forecast the precise impact of the pandemic on profits, it pointed out that the government support in place for the industry provided a “positive long-term outlook” for its regional bus business. As long as current support measures remain in place, it expects to continue to generate an operating profit.

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Chief executive Martin Griffiths is likely to give his reaction to the latest announcements of support for the bus sector from Holyrood and Westminster when the firm announces results on Wednesday.

Bus passenger numbers have fallen sharply during the pandemic but Stagecoach is confident of a positive long-term future for the industry.
Bus passenger numbers have fallen sharply during the pandemic but Stagecoach is confident of a positive long-term future for the industry.

Earlier this month the Scottish Government approved additional funding of up to £35.4 million to enable bus operators to maintain services over the next quarter and to cover the shortfall caused by the additional operational costs due to Covid-19 and the loss of fare revenue due to physical distancing and reduced demand. The support comes on top of some £250m already made available.

The UK government also recently launched a national bus strategy dubbed “Bus Back Better” providing £3 billion to local authorities to prevent better, more integrated bus services for their residents.

In March, Griffiths said he was confident that there is a” strong and positive future for public transport as we emerge from the pandemic”.

He said government support provided a “huge opportunity to fundamentally transform mobility in our communities, moving away from towns and cities built around cars to more vibrant and prosperous places well-connected by easy-to-use sustainable public transport and active travel”.

The group will also update investors on progress with unwinding the affairs of its former rail operations.

In April, Stagecoach founders Sir Brian Souter, currently a non-executive director, and his sister Dame Ann Gloag, began selling shares in the transport company with the intention of reducing their stake by 80 per cent over the coming decade.

They sold 11.6 million shares to institutional shareholders, reducing their holding from 27.1 per cent to 25 per cent.

Their plan is to reduce their stakes to 5 per cent over ten years, which would amount to an average annual sale of around 2.2 per cent of the company’s shares.

The move is aimed at managing the balance and diversification of their investment portfolios.

The news saw shares in the group fall, prompting analysts at Deutsche Bank to last month argue that it offers a potential short-term buying opportunity for investors.

They believe that the stake reduction has limited significance in terms of the outlook for the business and that the fall in share price has created an “interesting entry point in terms of valuation”.

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