Stagecoach still struggling with lower bus revenues
Passenger transport operator Stagecoach Group published a trading update in respect of its financial year ending 29 April 2017 on Wednesday, ahead of a series of meetings with analysts.
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The FTSE 250 company said expectations for the group's adjusted earnings per share for the year had not changed from when we announced our interim results in December 2016.
It said like-for-like revenue for the 44 weeks to 4 March was down 1.7% in UK regional bus, 0.9% in London bus and 2.2% in North America, while like-for-like revenue was up 1.6% for UK rail and 5.3% for the Virgin Rail Group.
“Total like-for-like passenger journeys fell by 1.7% in the UK Bus (regional operations) Division, largely as a result of weak underlying local economic conditions in some parts of the UK and sustained lower fuel prices,” the board said in a statement.
“We continually review and adjust our bus networks in response to changing demand.
“We are continuing to make progress with our digital investment programme, expanding contactless payments for bus travel, amongst other measures, to further enhance the quality of our bus and coach services.”
Stagecoach said it remained positive on the longer term opportunities within the division.
The company said it expected revenue for the London bus division to be below the equivalent prior year period, reflecting the contract tenders concluded in the prior year.
In North America, trading at the megabus.com inter-city coach business continued to improve from the positive action the board had taken to match services with changes in demand from customers.
“The market remains challenging due to the effects of sustained lower fuel prices, which have heightened car and air competition.
“The like-for-like revenue decline of 2.2% for the division includes a 5.4% decline for megabus.com North America, but encouragingly revenue per vehicle mile was up 2.8%.”
Trading at the other businesses in North America remained in line with board expectations.
“Like-for-like revenue at these businesses declined by 0.7%, largely reflecting reductions in mileage at our sightseeing business in California.”
In UK rail, industry revenue growth had slowed over the last 18 months, which the board had previously indicated.
“Although there has been improvement in our growth rates, they remain low by historical standards.
“Like-for-like rail revenue growth in our own UK rail division - including Virgin Trains East Coast - was 1.6% in the forty four weeks, with revenue growth at our inter-city businesses continuing to outperform growth at our London commuter business.”
As expected, revenue growth at Virgin Rail Group's West Coast franchise was higher than the industry average, which the board said partly reflected revenues being adversely affected in the second half of last financial year by the temporary closure of Lamington viaduct in southern Scotland.
“We continue to work constructively with the Department for Transport and other industry partners to meet our obligations, respond to variations in infrastructure and rolling stock plans, manage contract changes and ensure the continued stability and growth of our rail businesses.”
Stagecoach’s rail division had already been left reeling this week, by the announcement it had lost the South West Trains franchise.
The franchise, covering all commuter and regional routes out of London Waterloo station, had been held by the Stagecoach Group since it was privatised and transferred from British Rail in the 1990s.