Stagecoach rolling in money
Aug 29 2008 by Iain Laing, The Journal
TRANSPORT group Stagecoach has said profits since May have been higher than expected after a sharp rise in revenues at its bus division.
Stagecoach, which runs bus services across the North East, said the trading performance offered further evidence people were opting for bus and train travel in the face of high fuel costs.
The UK bus division achieved a 9.3% improvement in like-for-like revenues in the 16 weeks to August 17, including a 4.9% rise in passenger numbers.
A Stagecoach spokesman said this more than compensated the company for cost pressures stemming from its higher fuel bill.
Around two million UK passengers travel on Stagecoach buses every day in 100 towns and cities in the UK. The firm has a fleet of around 7,000 buses.
The spokesman added: “People are continuing to switch from travelling by other modes of transport to travelling by bus.”
In the UK rail arm, like-for-like revenues were 9% higher, while the company’s Virgin Rail joint venture achieved a 2% improvement.
The spokesman said: “We are encouraged by the current trading performance of the group, which provides further evidence of modal shift towards bus and train travel prompted by high fuel costs, environmental concerns and healthy lifestyles.”
Investec Securities expects pre-tax profits of £196m this year and £215.5m in 2009, but said it may upgrade these estimates by 6% as a result of the outperformance in the UK bus division.
However, analyst Joe Thomas said he remained cautious on Stagecoach because of the exposure of its South West Trains operation to a large downturn in central London employment.
He added: “These have not yet happened, and upgrades elsewhere in the business mean that the risks to group earnings are somewhat reduced. However, we think it is right to remain cautious for now.”
