Stagecoach reports profit drop but continues to look into takeovers

Transport group Stagecoach (LON:SGC) has reported a 24 per cent decline in annual profits today but said it was still closely pursuing potential acquisitions after a failed bid to buy rival National Express (LON:NEX) last year.

Kate Neilson
shareprices.com - Wednesday, June 23, 2010

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Stagecoach may look to make a new bid for National Express

The group posted profits of £129.8m for the year ended 30 April, down from 170.8m the year previous, after describing the last twelve months as a “difficult year”.

The group’s performance did have positive aspects for investors with the UK bus division of the business growing 0.4 per cent to £126.1m and like-for-like rail passenger revenues increasing by 3.9 per cent to £968.9m.

However, it was Chief Executive Brian Souter’s comments about possible takeovers for the future that have buoyed investor interest in the group.

In a conference call with reporters, Souter said: “Our job is to assess opportunities. If opportunities arise which we think are right for shareholders we’ll look at them, but we’re very happy with our own portfolio and existing strategy.”

Stagecoach’s bid to buy debt-ridden Nation Express fell through last year after the latter decided to sell shares to raise cash to reduce its debts. And since then there has been takeover activity in the industry. Europe’s largest transport group, German-based Deutsche Bahn, bought British transport group Arriva (LON:ARI) in April and predicted a Europe-wide transport sector consolidation wave following its acquisition as fellow groups attempted to complete the same feat.

With analysts predicting a new offer from Stagecoach to takeover National Express, shares have gained today with the price currently up to 194.20p, an increase of 1.9 per cent and 3.60p.

The positive outlook for Stagecoach has put it amongst the top climbers on the FTSE 250 index today. Heading the sector is emerging markets lender International Personal Finance (LON:IPF) which is gaining over four per cent after it reported today that trading was ahead of plan in the year to date and it hasn’t been adversely affected by the Greek debt crisis.

Also posting strong gains this morning is Kesa Electricals (LON:KESA), the parent group of Comet. It said today it had made an underlying pre-tax profit of £81.9m for the year ended 30 April – up from £69.5m the year previous and well in advance of the £76m forecast.

The FTSE 250 index is currently 0.4 per cent down at 9,897.68, down 41 points.

 

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