9th Dec 2015 11:33
LONDON (Alliance News) - Transport operator Stagecoach Group PLC on Wednesday said its pretax profit dipped in the first half despite higher revenue, and it issued a cautious outlook for the second half and downgraded its full-year guidance as it blamed concerns arising from the Paris terror attacks for a decline in revenue growth in its UK rail and UK and European coach services.
"We believe that revenue has been adversely affected by the terrorist attacks in Paris discouraging people from travelling to major cities,"Stagecoach said, though it expects this to change as those fears subside.
Along with those challenges, Stagecoach said it has seen softer-than-expected revenue from a number of its UK regional bus businesses, though it did not offer an explanation for this trend.
These trends pushed the company to downgrade its adjusted earnings per share guidance for the year to the end of April 2016, though it did not provide any specific figures.
Additionally, Stagecoach said it has withdrawn from bidding for the East Anglia rail franchise after it was unable to reach an agreement with Dutch joint venture partner Abellio on elements of the proposed bid.
The FTSE 250-listed company said its pretax profit for the half to the end of October fell to GBP90.8 million from GBP98.3 million, mainly due to higher one-off financing charges in the half. Stripping out the one-offs, pretax profit rose to GBP121.5 million from GBP108.6 million.
Revenue rose to GBP1.97 billion from GBP1.55 billion, mostly due the inclusion of revenue from the Virgin Trains East Coast franchise, which kicked off in March and in which Stagecoach has a 90% stake. The group's bus and rail operations in the UK were solid, but its US coach business continued to take a hit from low fuel prices, which has encouraged potential passengers to use their own cars instead.
Stagecoach will pay an interim dividend of 3.5 pence per share, up from 3.2p a year earlier.
"Overall, the group is in good financial shape and we were pleased to have put new bond financing arrangements in place earlier this year. Challenges remain in our sector in the short-term but the underlying strength of our businesses across the UK, continental Europe and North America, means we are well placed to drive value for our customers and investors," said Stagecoach Chief Executive Martin Griffiths.
Stagecoach shares were down 13% to 308.30 pence late morning on Tuesday, the worst performer in the FTSE 250.
By Sam Unsted; [email protected]; @SamUAtAlliance
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