20th Feb 2014 08:38
LONDON (Alliance News) - Go-Ahead Group PLC Thursday reported higher profits and revenues for the first half of its financial year, driven by a strong recovery in its bus operations and as it moved record numbers of rail passengers, and the company said it is on track to increase operating profits at the bus unit to GBP100 million in 2015/16.
The bus and rail operator reported a pretax profit of GBP40.3 million for the six months to December 29, 2013, up from GBP30.8 million a year earlier, as revenues rose to GBP1.37 billion, from GBP1.30 billion and it made cost savings of about GBP4.5 million, pushing up its operating profit margin to 3.7%, from 3.2%.
Go-Ahead had set out the GBP100 million operating profit target for its ailing bus operations in October 2012. Operating profit in the first half of the current year rose 14.7% to GBP40.6 million as both its regulated bus operations in London and its deregulated operations elsewhere. It said commercial and concessionary travel grew in all its deregulated areas, while it reported a high level of contract retention in London.
Profits also improved in its rail business, with operating profit up to GBP10.5 million in the half, from GBP6.7 million a year earlier. However, it warned that profitability in the rail unit would be lower in the second half.
"The rail division is not expected to generate material profits in the second half of the year as the premium profile becomes more stretching and an unprofitable seven-month extension period of the Southeastern franchise begins," it said.
Go-Ahead currently runs the Southeasten, Southern and London Midland rail franchises. It is bidding for the new Crossrail franchise, as well as the new Thameslink franchise that will consolidate the existing Southern, Thameslink and Great Northern Franchises. It faces competition from rival FirstGroup, which currently runs the Thameslink franchise, among others.
In its statement, Go-Ahead said it doesn't expect to achieve the same level of cost savings it achieved in the first half in the second half of the year, but remains on target to deliver GBP10 million of cost savings by 2015/16.
It said its full-year expectations remain unchanged, as a similar performance in the bus operations will be offset by reduced profitability in rail.
It is proposing to keep its interim dividend flat at 25.5 pence.
Go-Ahead shares were down 0.7% at 135.5 pence early Thursday.
By Steve McGrath; [email protected]; @SteveMcGrath1
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