Mobico cuts FY EBIT guidance, suspends dividend

Mobico shares tumbled on Thursday after the transport operator - formerly National Express - cut its full-year earnings outlook and said it was looking to sell its North America school bus business and suspend its final dividend.

In an update for the period from 1 July to the end of September, the company said it now expects FY2023 earnings before interest and tax of between £175m and £185m, down from guidance of between £200m and £215m given in July.

Mobico reported revenue growth of 10% year-on-year but said the path to improving profitability had been impacted by higher costs, particularly in the UK and in North America school bus "as a result of investment in a strong operational school year start up".

Chief executive Ignacio Garat said: "We recognise that the recovery of our profitability will take longer than we had previously expected. That is why we are announcing decisive actions to ensure we deliver sustainable profitability from our growing revenue base. Whilst our belief in the potential of the group remains strong, we will move at greater pace with new leadership teams in the UK and North America.

"Our actions to ensure a strong North America School Bus school year start up positions that business well for a potential disposal which would accelerate debt reduction and increase flexibility for growth investment. We have therefore commenced preparations for a sale process in early 2024."

At 0900 BST, the shares were down 22% at 66.40p.