National Express Q1 boosted by solid US performance

Transport operator National Express reported 6.2% growth in first-quarter revenue on Wednesday, with its North American business the standout performer.

On a reported basis, group revenue in the period from 1 January to 30 April was up 1.7%.

North America put in the strongest performance, with revenue there up 9% at constant currency thanks to recent acquisitions and "robust" underlying trading, despite the impact of school closures after a period of heavy snow.

Meanwhile, the UK business saw revenues rise 1.4%, with the coach division continuing to benefit from its "sophisticated" revenue management system and marketing strategy, with revenue up 2.3% in the period. Easter was particularly strong, with revenue up 9% and passenger growth of 5% year-on-year.

The bus business benefited from "sophisticated" pricing, with the low fares zones and new smart ticketing proving increasingly popular and helping to push revenue 0.7% higher.

National Express said it had achieved double-digit growth in group pre-tax profit year-on-year, on both constant currency and reported bases, with improved profit margin. The group, which gave no figures, said revenue and profit benefited from organic growth and the bolt-on acquisitions made last year.

In addition, it said it remains on track to deliver its revenue, profit, free cash flow and leverage targets for the year.

Chief executive Dean Finch said: "I am pleased all of our divisions have started 2018 in a positive manner. Our strong revenue performance has again been driven by both organic growth and the benefit of recent acquisitions. Our diversified international portfolio continues to deliver broad-based growth and open additional opportunities for further expansion.

"We continue to focus on operational excellence to drive growing shareholder value by both delivering high quality services for our customers and generating cash to invest in future expansion. These opportunities will continue to be sought in a disciplined manner and we will only pursue them if they meet our strict financial criteria. We remain on track to meet our full year profit and cash flow expectations."

Investec put its 'buy' rating and 390p price target on the stock under review following the update, saying: "The strength of current trading and recent acquisitions suggest that profit before tax will be slightly ahead of our forecasts, particularly given recent US dollar strength."

Meanwhile, Canaccord Genuity maintained its 'buy' rating, highlighting good free cash flow generation, an attractive and rising dividend yield and an undemanding earnings valuation.

At 1120 BST, the shares were down 0.5% to 998.50p.