Stagecoach earnings rise, though outlook uncertain

Passenger transport operator Stagecoach posted final results for the year to 30 April on Wednesday, with adjusted earnings per share rising 3.7% to 27.7p.

The FTSE 250 firm saw revenue of £3.87bn during the period, up from £3.2bn, with profit before tax rising marginally to £187.4m from £185m.

Total operating profit rose to £228.8m from £227.1m.

“These are a solid set of results, with further revenue and underlying profit growth,” commented chief executive Martin Griffiths.

“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.”

Griffiths said Stagecoach was investing for growth and improving customer journeys with new digital tools, smart ticketing and the introduction of greener and more comfortable buses and trains.

He also said the company is taking a prudent approach to controlling costs and ensuring its transport networks meet the changing conditions and requirements of customers.

“Our locally-managed bus companies have strong partnerships with local authorities, allowing them to deliver tailored transport solutions to help communities get to work, access health and education, and enjoy shopping and leisure.

“We have been independently assessed as offering the best value fares of any major UK bus operator and our customer satisfaction levels are amongst the best in the sector,” Griffiths explained.

Stagecoach confirmed the sale to FlixBus of the retailing part of Megabus Europe, though Griffiths said the division will continue to operate a number of European inter-city coach services as a contractor to FlixBus.

“In North America, we have taken steps to match our megabus.com inter-city coach services to changing patterns of demand and we are well placed to expand our networks as conditions improve.”

Griffiths noted the result of the recent referendum in favour of Brexit, and said that as with other businesses Stagecoach was closely following developments.

“Although we have little business in Europe outside the UK, we acknowledge the referendum result may lead to continuing economic, consumer and political uncertainty.”

“Like other business sectors, we are affected by reduced public spending and factors in the wider economy, such as weakening consumer confidence and slowing growth in both UK GDP and real earnings.”

Griffiths said public transport also faces a challenge from sustained lower fuel prices, the related effects of car and air competition, as well as traveller concerns over global security.

“Nevertheless, we have experienced management teams who are working hard to stimulate growth and we have not significantly revised our expectation of 2016/17 adjusted earnings per share.”

Stagecoach confirmed an 8.6% rise in dividends to 11.4p per share, from 10.5p per share last year.

Of that, the proposed final dividend was 7.9p, compared with 7.3p.