Organic growth across all divisions. Revenue rises 5%
National Express Group PLC has released its interim management statement for the nine months ending September 30, 2011.
The operator achieved organic growth in all divisions, with a 5% rise in revenue on the previous year. There were also further improvements in profit margins and cost savings.
Revenue in the group’s UK Bus business increased by 2% over the period. Commercial revenue in the West Midlands increased 5%, with the rate of growth continuing to slow as fare rebalancing actions in 2010 have worked through. The concessionary fare settlement declined by 2% year-on-year, in line with the previous trend. The margin for the third quarter was stable year-on-year. Following the preliminary report into the UK bus industry by the Competition Commission, National Express does not anticipate significant changes to its operations.
Revenue growth in the core National Express UK coach network increased 6% in the period, with the operator’s nationwide £9 travel offer cited as particularly successful and Eurolines also said to have performed well in the third quarter. The rate of decline in revenue from contract operations reduced. Overall profitability for the UK coach division continued to improve. National Express has also launched its programme to partially mitigate the withdrawal of the UK government’s concession subsidy from November, with a senior and disabled persons coach card and enhanced promotional activity.
Revenue in the North America school bus business increased by 10% over the period. Contracts for a net 600 new buses, along with a successful bidding season, were cited as reasons for the increase.
Also in the North American division, National Express reported:
- a targeted $40m cost saving programme is nearing completion;
- parts procurement has now been consolidated, GPS is now installed on over 16,500 buses; and
- significant opportunities for operating and schedule improvements are expected to be identified.
As reported in CBW at the time, on September 13, 2011, National Express announced the $200m acquisition of school bus business Petermann Inc. Regulatory clearance for the acquisition is expected to be complete by the end of 2011.
In Spain, the Alsa Bus & Coach business delivered a strong third quarter performance, with revenue increasing by 7% in the period.
Both the Intercity and Urban divisions saw strong revenue growth, particularly around Madrid. Operating mileage increased by 1% in response to additional capacity requirements. Despite the disruption in North Africa, the Moroccan business has continued to grow. The newly secured Madrid Tourist bus service which is expected to add €10m per annum in revenue, to help offset reduced airport operations.