National Express parent Mobico reports continued revenue growth driven by passenger volumes, route recovery and pricing, but a 36% drop in profitability, which was impacted by inflationary pressures and a £105m reduction in Covid-related support in its 2023 results. It recorded revenue growth of 12.2%, including a record year at Spanish division ALSA, which it says delivered record revenues and profits in its centenary year, and driver and route recovery in its North America School Bus division.
The company reports an Adjusted Operating Profit decreased to £168.6m from £197.3m the previous year, with the positives offset by cost inflation, reduction in Covid-19 subsidies, and lower profitability in Germany, and a Statutory Operating Loss of £21.4m. The Group says that ‘further pricing and restructuring benefits’ are to come with its ‘Accelerate 1.0’ programme delivering at least £30m in annualised savings, and ‘Accelerate 2.0’ well underway targeting at least £20m of annualised savings.
During the year, it won 43 new contracts, worth over £1bn in total contract value and around £126m in annualised revenue, and mobilised operations in new key target cities including Porto, Seville and Charleston as well as multi-modal hub expansions in Madrid, Chicago, Boston, and Geneva.
Group Chief Executive Ignacio Garat said: “Our 2023 results are below the expectations we set ourselves at the beginning of the year. The delay due to the additional work relating to the German rail business was regrettable but it is now concluded. Although Group revenue growth was encouraging, driven by passenger demand and actions taken to recover inflation, this has not translated into an improvement in reported profitability.
“I am nevertheless encouraged by the progress we have made in transforming the business, with the new leadership we have appointed in North America School Bus and the UK and Germany making a tangible impact and the first phase of our Accelerate cost efficiency programme delivering ahead of expectations.
“Our focus remains on delivering the benefits of our restructuring programmes and in recovering inflationary costs through pricing, while maintaining a relentless focus on the quality of our offering to support growth. Opportunities remain to create a more appropriate and sustainable cost structure and we will not hesitate to take action where there is a clear strategic and financial benefit.
“I’d like to pay tribute to all of our employees, customers and stakeholders for their considerable efforts and support as we lead the modal shift from cars to mass transit, improving social mobility and reducing carbon emissions.”
The group rebranded its over-arching operations as Mobico from National Express last year. Its share price fell by as much as 11% as it announced the results, which showed a 36% fall in underlying group pre-tax profits and pre-tax losses of £98.3 million, although this represents an improvement on the £225.3 million of losses in 2022.
Following the publication of the results and the delays caused by problems at its German rail division, Mobico said Chief Financial Officer James Stamp will stand down at its annual general meeting on 11 June, after which he will be replaced on an interim basis by Helen Cowing, who joins the company on 8 May.
In its UK businesses, Mobico said revenues rose by 9.5%, thanks to an 18.3% growth in its bus division thanks to fare increases, a rebound in passenger numbers and without further disruption from driver strikes.
