29th Jun 2016 06:56
LONDON (Alliance News) - Transport operator Stagecoach Group PLC on Wednesday reported a decline in annual pretax profit due to higher finance charges and weaker margins over the year which offset revenue growth, and it announced the sale of the retail operations of its Megabus Europe coach business.
The FTSE 250-listed company said pretax profit for its financial year to April 30 was GBP104.4 million, down from GBP165.2 million the year before, pushed lower by higher finance charges and more costs incurred from investments in improving the customer experience on bus and rail services.
This offset growth in revenue to GBP3.87 billion from GBP3.20 billion, helped by the contribution from the Virgin Trains East Coast rail franchise, which started in March 2015. Revenue growth for the company's regional bus operations was weaker in the year, while Stagecoach said the outlook for the UK rail industry has become more challenging.
Stagecoach said it has started the new financial year in a "satisfactory" manner, with no significant changes made to its earnings guidance for the current year. It said it remains confident on the long-term fundamental strength of the public transport sector.
Stagecoach will pay a final dividend of 7.9 pence per share, up from 7.3p, taking its total dividend up 8.6% to 11.4p from 10.5p.
"These are a solid set of results, with further revenue and underlying profit growth. We are experienced at managing the challenges we face, and the improvements and changes we are making now should ensure that we continue to have a strong portfolio of sustainable and growing businesses for the long-term," said Martin Griffiths, Stagecoach's chief executive.
Stagecoach also said it has agreed to sell its Megabus Europe retail operations to FlixMobility GmbH, a German-based European inter-city bus services provider. Stagecoach is selling the retail portion of the business, which involves the design of inter-city coach services, including their timetabling, co-ordination and marketing, as well as the pricing and sale of journeys on those services.
Stagecoach will continue to operate a number of European inter-city coach services as a contract to FlixBus under the deal. No financial details were disclosed, but Stagecoach said it expects to make a small gain on the sale.
By Sam Unsted; [email protected]; @SamUAtAlliance
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