National Express sees bus margins grow

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Profits increase despite concerns over removal of coach concessions
Profits increase despite concerns over removal of coach concessions

UK and North America grow – and even Spain remains stable

National Express Group’s half year results for the six months ended June 30, 2012 show the Group’s non-rail profitability maintained despite the “considerable headwinds” of the previously anticipated loss of UK Government subsidy for coach concessions and the onset of recession in Spain. Rail profits have fallen following the hand back of East Anglia as the Group anticipated.

Operating margin increased to 11.3% (2011: 10.5%) with UK bus margin and profit continuing to grow. The Group claimed strong operating cash generation, with 125% conversion of operating profit. National Express said profit in Spain was stable, despite a challenging economic environment and localised industrial action, with excellent cash collection. The Group saw expansion of bus operations in Morocco, renewal of the Granada bus station concession and acquisition of a concession in Bilbao.

National Express’ North American operation has grown profit and enjoyed a successful bid season with a retention rate of 97% and new bid wins of 1,300 buses (2011: 1,000).

Dean Finch, National Express Group Chief Executive, commented: “The first half of 2012 has seen a resilient underlying performance across the Group, considering the headwinds we have faced. This reflects a reassuringly stable performance in Spain, accompanied by good growth in UK Bus and North America, with lower profits in our Rail and UK Coach businesses, as expected.

“This trend is expected to continue in the second half, with further progress from UK Bus and our recent North America acquisitions. UK Coach still faces headwinds but should progressively mitigate concession funding changes. ALSA’s flexible operating model and experienced management team is best placed to cope with the uncertainties presented by the economic crisis in Spain. Across the Group, we continue to drive operational efficiency, cost control and incremental revenue growth, focusing on improving returns on invested capital and creating long term economic value for shareholders.

“Looking ahead, we have a pipeline of emerging opportunities across the portfolio of businesses, building on organic growth, as well as new contract bid prospects in rail, bus and school bus services. Our new North American transit business and emerging opportunities in Continental Europe will support this. National Express owns and operates some high quality assets and is well placed to exploit opportunities.”