NX upbeat about half-year results

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Revenue growth in both UK Coach and UK Rail and debt cut

National Express Group (NEG) has reported ‘positive progress’ in the first half of 2014. Up until June 30, the firm said it enjoyed ‘excellent cash generation,’ amounting to £80m of free cash flow, with a full year target of £150m. Net debt reduced by £80m over the last 12 months.

It saw underlying growth in both revenue and passenger numbers, in the UK, North America and Morocco – and the dividend increased 3% to 3.35 pence per share.

The previously disclosed one-off impacts of extreme US weather and Spanish industrial action, combined with the strength of Sterling have impacted both revenue and profit. Underlying Group revenue was up 2%, while UK Coach was up 7%; UK Rail grew 6%; and UK Bus commercial revenue rose 3.2%. North America also saw 1% revenue growth, while Spain declined by 1%. Adjusting for these one-off impacts and Sterling’s strength, normalised profit before tax would have increased by £3.8m.

Dean Finch, National Express Group Chief Executive, said: “We have made important progress in the first half of the year. Our success in retaining the Essex Thameside rail franchise confirms our long-term future in UK rail.

Other major contract successes across the Group demonstrate the quality of our services and strength of our reputation in the markets we serve. Our strong cash generation remains a highlight and a particular focus of the business this year.

“We made clear in our previous statement that extreme weather and industrial action in the US and Spain respectively would affect our half year results. We remain determined to deliver the improvements and efficiencies necessary over the course of the year to achieve the Board’s expectations.

“We also have a strong pipeline of further opportunities with many bids being evaluated at present, including ScotRail and a number in German rail. We have been selected as the preferred bidder for a bus contract in Bahrain, potentially opening a new and exciting market. We are also actively monitoring the situation in Portugal and Spain where the Group is well placed to deploy its expertise when liberalisation of these markets occurs.”