Transport giant Stagecoach today reported a 36.8 per cent slide in annual profits and said it was selling the loss-making European arm of its Megabus budget coach business.
The sale to rival FlixBus does not include the UK and North American operations of Megbus and is expected to complete at the start of next month.
Perth-based Stagecoach said it would continue to operate a number of European inter-city coach services as a contractor to FlixBus “and we look forward to building on our relationship with it”.
Megabus Europe racked up a worse-than-expected operating loss of £24.1 million for the year to the end of April, against a £4.2m loss a year earlier, which it blamed on the expansion of its inter-city services in response to deregulation in the French market.
“We continue to see an impact from low fuel prices, strong competition from other inter-city transport operators and also, we believe that the high profile terrorist attacks that occurred in Paris and Brussels during the year discouraged some travellers from visiting major European cities and therefore had an adverse impact on the division’s revenue,” Stagecoach said.
No value was disclosed for the deal, but Stagecoach said it expects to generate a gain from the sale in next year’s annual results.
The deal came as the group reported an annual pre-tax profit of £104.4m, down from £165.2m a year earlier, despite revenues growing to £3.87 billion, from £3.2bn last time.
Chief executive Martin Griffiths said: “We are experienced at managing the challenges we face, and the improvements and changes we are making now should ensure that we continue to have a strong portfolio of sustainable and growing businesses for the long-term.
“We note the result of the recent referendum in favour of the UK leaving the European Union. As with other businesses, we are closely following developments in this area. Although we have little business in Europe outside the UK, we acknowledge the referendum result may lead to continuing economic, consumer and political uncertainty.”
Despite the slide in profits, Stagecoach proposed an increase in its final dividend to 7.9p a share, up from 7.3p a year ago, to be paid on 5 October.