BUS and rail group Stagecoach has reported a rise in profits and revenues as the higher cost of petrol saw more people ditch their cars and take public transport.

The Perth-based transport firm, which runs bus services across the North East, said operating profits grew 25% to £240.2m in the year to April 30, as revenues increased in all of its divisions.

Its UK rail arm, which runs the South West Trains commuter franchise and East Midlands Trains, saw revenues growth of 4.2% to £1bn, while operating profits increased by 16% to £48.4m.

Virgin Rail, in which it owns a 49% stake, notched up sales growth of 10.5%, while its share of operating profits increased 55% to £39.5m.

The company’s regional UK bus division – which operates in cities including Liverpool, Newcastle, Hull and Manchester – saw sales growth of 2.1% to £893.6m. Operating profits rose 21% to £153.1m.

Chief executive Sir Brian Souter said the company had seen further evidence of modal shift as consumers look for alternatives to the rising cost of motoring and increasing road congestion.

He added that the move towards green forms of transport will provide a boost to the business, while public transport will be at the heart of next year’s Olympic Games in London.

Total revenues for the year were up 10% to £2.4bn. Its regional bus business, which operates in 100 towns and cities in the UK, saw like-for-like passenger numbers increase by 0.9%. It said it also benefited from “modest” fare increases over the year, while its profit margins remained among the best in the industry.

The grant it receives from the Government to run its bus services will decrease from April 2012 while its fuel costs will rise, which will lead to higher fare increases this year.

But the group is confident it will at least maintain its operating profits as the cost of motoring also continues to rise.

In London, where it is the third largest bus operator after buying the East London Bus Group last year, it recorded revenues of £133.6m and made an operating loss of £5.9m. But it thinks it will turn a profit this year as it is getting rid of under-performing contracts.

Its rail business benefited from above- inflation fare increases, which rose by 1% above RPI inflation in January and will rise by 3% more next year.

South West Trains and East Midlands Trains saw an increase in passenger numbers although East Midlands made a loss in the year.

The group has been shortlisted for the Greater Anglia and Intercity West Coast rail franchises.

Total pre-tax profits rose 52% to £191.2m, and was also boosted by a strong performance from its businesses in the US.