25th Mar 2024 11:26
(Alliance News) - Reduced guidance and a further delay to the annual results has cast a "dark cloud" over Mobico Group PLC, analysts on Monday said.
Shares in Mobico fell 4.6% to 68.20 pence in London on Monday.
The Birmingham-based public transport provider, formerly known as National Express, now expects annual results to be published in the second half of April.
This is compared to its previous expectation of publishing them by the end of March, itself delayed from February 29.
Mobico expects adjusted earnings before interest and tax in the range of GBP160 million to GBP175 million, reduced from previous guidance of GBP175 million to GBP185 million.
Mobico said expected Ebit to be at the upper end of that range.
Analysts at Jefferies estimated that earnings forecasts would be cut by 6%, using the midpoint of the updated guidance.
But, as the broker pointed out, the division under review accounts for less than 6% of group Ebit.
Despite this, AJ Bell Investment Director Russ Mould said the lowered guidance has cast a "dark cloud" and left investors "nervous about holding the shares in the run-up to the numbers being published."
Mobico said it had made good progress in its review of accounting judgements relating to its German rail business, outlined in February, but said a number of items remain to be agreed with its auditors.
In particular, Mobico highlighted unexpected revisions to two key indices used to calculate the recovery of energy costs under the contracts.
Talks with relevant passenger transit authorities continue, but Mobico said it was unlikely that these points will be resolved before the release of 2023 results.
At this stage, Mobico estimates that the maximum effect of the revised indices is a reduction in total cost recovery over the term of the contracts, to 2032, of around GBP15 million.
Mobico expects the onerous contract provision as of December 31 to increase by about GBP70 million, in addition to a prior year adjustment in relation to the contract provision in 2022 of around GBP25 million.
Aside from this issue, Jefferies believes the strategic focus for the business is on the ongoing disposal process for its North American school bus business.
"We continue to expect the disposal to prove a material positive catalyst, kick-starting a debt-to-equity value transfer, followed by a deleverage-driven re-rating journey, as [Mobico] addresses the leverage overhang that depressed valuation," Jefferies said.
By Jeremy Cutler, Alliance News reporter
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