Stagecoach investors seek signs of growth

Investors in transport giant Stagecoach will be looking for continued robust growth in its UK bus division and signs of improvement in its US arm when it reports first half figures this week.

Satgecoach is likely to highlight plans for a pilot scheme of driverless buses to run over the Forth Road Bridge between Edinburgh and Fife.

Stagecoach, which carries three million bus passengers every day, last updated the market in September when it said revenues in the division were up by 3.3 per cent in the first four months of the financial year.

Michael Hewson, chief market analyst at CMC Markets, said the good start had been helped by decent summer weather in the UK “which prompted a lot of people to stay at home and use buses and trains more to get around”.

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Although the company said it expects revenue growth in the division to moderate over the remainder of the year, Spreadex analyst Connor Campbell said investors will want to see like-for-like revenues in the second quarter “not fall too far from 3 per cent”.

Campbell also said the city will be looking for signs that Stagecoach is finding ways to tackle the problems in its US arm where like-for-like sales fell 3.8 per cent in the first four months, including a 1.8 per cent decline for its North America division.

Stagecoach’s London bus division saw a 2.2 per cent fall in revenues in the first 16 weeks, reflecting the impact of contracts lost in the previous year. Investors will also be keen for news on operating costs in the division after the company flagged they were running higher than budgeted due to factors including start-up costs of a sightseeing service.

In the latest update the company said the financial performance of its rail businesses, which includes Virgin Rail Group’s West Coast Trains, was broadly in line with expectations. Earlier this year Stagecoach and Virgin were stripped of the East Coast Main Line franchise by the UK government, and said it had learned “lessons” for future bids.

The company’s results on Wednesday are also likely to highlight plans for a pilot scheme of driverless buses to run over the Forth Road Bridge between Edinburgh and Fife. Stagecoach will operate the trial service, expected in 2020, which will see five single-decker buses carrying 42 passengers travelling 14 miles from Ferrytoll Park and Ride in Fife to the Edinburgh Park tram exchange.

The initiative is part of a UK-wide trial of driverless vehicles, which will see two other pilots of “autonomous” taxi services taking place in London. The Scottish scheme received £4.35 million of a £25m UK grant to help make driverless technology on UK streets a reality. Work on the vehicles is being carried out at the Guildford site of Falkirk-headquartered busmaker Alexander Dennis.