National Express Transport Solutions (NETS) is to close its Kings Ferry and Clarkes depots in Gillingham and Sydenham, though the firm has clarified that it is not proposing any changes to the Clarkes or Kings Ferry brands at the present time. A spokesperson for National Express said: “We continually review the profitability of our portfolio to ensure we are set up to offer the very best products at the best prices in the market to our customers. To ensure we can operate efficiently, we have made the difficult decision to close our depots in Sydenham and Gillingham. We will be entering a consultation period with colleagues and we will do all we can to support them through this process.
“We will continue to operate corporate and private hire work from our strong and efficient network of depots across the UK.”
CBW understands that work will be re-allocated to other depots within NETS.
‘Longer recovery’
Meanwhile parent company Mobico’s latest financial report says that although group revenue is up 10% year on year, a full recovery in profitability is taking longer to deliver, leading to decisive action being taken to improve the situation. The group says its previously announced productivity and cost reduction programme is on track to deliver £15m in the year and £30m annualised savings, with further actions launched to improve cost efficiency expected to deliver an additional £20m annualised saving.
Ignacio Garat, Group Chief Executive, said: “We recognise that the recovery of our profitability will take longer than we had previously expected. That is why we are announcing decisive actions to ensure we deliver sustainable profitability from our growing revenue base. Whilst our belief in the potential of the Group remains strong, we will move at greater pace with new leadership teams in the UK and North America.
“The Board is keenly aware of the importance of dividends to shareholders and the decision to suspend the final dividend was not taken lightly. The Board will continue to consider the dividend position as progress is made on deleveraging.”
In the UK, revenue grew by 13% on Q3 2022; in Germany revenue was down by 3%. New UK & Germany CEO Alex Jensen joined the company in September with a remit to sharpen the division’s commercial focus, and the group says it has performed a rapid assessment of the division and have identified clear areas for improvement including better commercial scrutiny and ambition, tighter cost control and ownership of cost reduction initiatives, and improved allocation of capital and resources.
The National Express coach business continues to trade strongly, with revenues up 26% on Q3 of the prior year, and passenger growth of 24%, and now back at 96% of pre-Covid levels. A review by the new management team of the National Express Transport Solutions business concluded that the underlying profitability is below the levels required, a key factor in the decision to close two of the five key NETS depots. The company says it will continue to review the ongoing return potential of the business.
In its bus division, passenger volumes are around 97% of 2019 levels the group reports, whilst in North America revenues grew by 4% on Q3 2022, and Spanish operator Alsa has delivered a strong quarter with revenue up 16% on the same period.
Following a strategic review of its North America school bus business, the group believes that it is strongly positioned for continued recovery and long-term growth, but also that the demand for high quality, infrastructure-like businesses presents a ‘potentially compelling opportunity to deliver shareholder value through a potential disposal’ and has elected to prepare the North America school bus business for sale, with the intention to start the sale process in early 2024.
