Trading update boosts shares in Stagecoach
Apr 29 2008 by Iain Laing, The Journal
STAGECOACH shares posted strong gains yesterday after the bus and rail firm said it had been trading ahead of expectations.
The Scottish company which runs buses across the North East said UK rail, which includes the commuter service South West Trains, and its Virgin Rail joint venture were the main contributors to the expected out-performance in the year to April 30.
Shares rose by 7% and built on the gains seen in the transport sector on Friday after Go-Ahead also produced a reassuring trading update.
Revenues in UK rail rose 13.1% in the 48 weeks to March 30, a period which included the Easter holiday. Virgin Rail posted an 11.2% improvement, while the company’s bus operation showed a 6.9% gain. The group’s rail arm recently started its new 10-year South Western rail franchise, which includes the running of around 1,600 trains a day in south-east England out of London Waterloo.
It has boosted revenues with the deployment of additional ticket officers and new vending machines. However, the competitive bidding environment for new franchises has knocked margins and Stagecoach recently said half-year rail operating profits declined to £25.3m from £31.4m.
The group has also warned that the subsidy it receives from the Department of Transport will reduce by more than £100m over the next two financial years, resulting in some variability in profits.
