Stagecoach Shares Rise on Potential US Sale

Wed, 5th Dec 2018

Shares in the train and bus operator Stagecoach have increased after the news broke that the company is considering selling off its struggling North American companies, including its ownership of the budget coach company Megabus.

Rising fuel costs and an intensely competitive marketplace are some of the challenges that the company is facing. Operating profits in its North American arm have fallen by 23.2 percent, down to $21.2 million, for the six months leading up to the 27th October.

The company also cited a national shortage of bus drivers as another reason for their difficulties, as it has presented them with rising staff costs, at a time when sales are falling.

Stagecoach has written down the value of their North American operations by £85.4 million, which now puts the firm as a whole into a loss. There are some positives on the horizon, however. The company will benefit from the recent fall in oil prices. In addition, they have seen better than expected profits in their UK rail arm. Trading for the UK bus division, however, was mixed. Outside London they have enjoyed a robust performance, however their London bus operations are struggling as it appears that many commuters prefer to cycle instead of taking the bus.

Analysts warn that while Stagecoach has seen some strengths in the rail sector, in the absence of any new rail franchise wins, the overall earnings of the group are likely to continue to decline over the next few years.

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