Stagecoach, the Perth-headquartered bus and rail giant, has upped its earnings guidance on the back of strong trading and “positive progress” in its UK rail division.
In a trading update, the group said like-for-like revenue was up 3.4 per cent at its UK regional bus operations in the financial year to date as it increased its market share.
Revenue growth was limited to 1.3 per cent at its London bus division. Stagecoach said it had undertaken a detailed review to “identify opportunities to improve our performance on tenders for Transport for London contracts”.
It added: “The bidding environment remains highly competitive and this will continue to exert pressure on the profitability of our UK bus (London) division. However, our priority remains securing contracts at a sustainable level where the financial returns reflect the capital invested.”
At the UK rail arm, excluding Virgin Trains East Coast, revenues were up by 1.4 per cent while its Virgin Rail Group joint venture notched up growth of 6.7 per cent.
It noted: “The financial performance of our rail businesses is ahead of our expectations, with continued good underlying revenue trends.
“We have continued to make progress in achieving favourable outcomes from concluding industry charges and contractual matters associated with the expired South West Trains franchise, resulting in additional profit being recognised in the current financial year.”
There was a like-for-like revenue decline of 1.4 per cent at the group’s North American division, including a 1.9 per cent decline for Megabus.com North America. Trading at the other businesses in North America was said to be in line with expectations.
Stagecoach expects the disposal of the North America arm to complete before the financial year end. The group is on track to release its annual results on 26 June.
Shares were up about 5 per cent by lunchtime Wednesday.