5th Dec 2018 08:11
LONDON (Alliance News) - Stagecoach Group PLC on Wednesday said it swung to a loss in the first half of its current financial year, but adjusted earnings were ahead of expectations.
Shares in the FTSE 250 constituent were up 4.7% at 161.00 pence on Wednesday, the second best performer in the index.
The transport operator said it swung to a pretax loss of GBP22.6 million in the six months to October 27 from GBP96.7 million profit reported for the same period a year earlier. Adjusted pretax profit declined by 10% to GBP87.0 million from GBP96.7 million year-on-year.
The result was hurt by lower revenue, which fell by a third to GBP1.23 billion from GBP1.79 billion year-on-year due to the expiry of South West Trains franchise in August last year and the Virgin Trains East Coast franchise in June.
Revenue in the UK Rail division was down 63% to GBP335.1 million from GBP899.2 million year-on-year. Like-for-like revenue, which includes East Midlands Trains and Sheffield Supertram businesses, rose by 0.4% to GBP202.1 million from GBP201.3 million.
The company's operating loss for the half-year was GBP6.2 million compared to GBP114.8 million profit reported in the first half of financial 2018, mainly reflecting a GBP85.4 million impairment of goodwill in respect of its North America operations.
In the first half, revenue in North America fell 4.1% to USD245.7 million from USD256.3 million reported the year before, reflecting strong competition in certain markets Stagecoach operates in.
Stagecoach said it is reviewing options for North American unit and is currently in talks regarding a potential sale of all or part of the business.
Elsewhere, in the UK Bus division, revenue from regional operations improved by 2.9% to GBP527.1 million from GBP5142.4 million, while London operations generated revenue of GBP128.6 million, up slightly from GBP128.4 million a year ago.
The company noted that the UK Bus division has benefited from the favourable summer weather throughout the country and rail replacement work at Derby railway station.
Stagecoach maintained its interim payout at 3.8 pence a share.
"While we recognise the competitive challenges in some of our markets in the UK and North America, we are confident that public transport will be central to delivering government priorities to grow the economy, connect people and communities, reduce road congestion and improve air quality," said Chief Executive Martin Griffiths.
"The group is focused on making further progress in the second half of the year and we have increased our expectation of full-year adjusted earnings per share to reflect the above-forecast rail earnings in the first half of the year," Griffiths added.
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