Stagecoach Group trading update

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Stagecoach Group plc has provided an update on its trading ahead of a series of meetings with equity analysts. Recent trading has been consistent with its expectations and there is no change to the adjusted earnings per share that it is anticipating for the year ending April 30, 2015.

Like-for-like revenue growth for the financial year to date, 48 weeks ended March 29 2015, in each of the Group’s main businesses is as follows: UK Bus (regional operations) 2.4%, UK Bus (London) 8.1%, UK Rail 9.0%, North America 1.0% and Virgin Rail Group 7.6%.

>UK Bus (regional operations)

The company has seen modest year-to-date growth in passenger journeys. It is pleased that the forecast reduction in its fuel costs has enabled it to keep fare increases for the year ahead to a minimum, consistent with its long-term objective to grow passenger volumes through its value fares strategy and notwithstanding increases to staff and other costs.

In mainland Europe, Stagecoach has recently commenced domestic megabus.com coach services within Germany. The company is now progressing plans for a new Cologne-Lyon-Barcelona service as well the first megabus.com services within Italy. In the short-term Stagecoach expects operating losses to increase from around £5m in 2014/15 to around £10m in 2015/16. This is based on previous experiences of megabus.com start-up operations, where the company invested in expanding the business in the early years of megabus.com in each of the UK and North America, which are now strong, profitable businesses.

>UK Bus (London)

Revenue growth is consistent with Stagecoach’s expectations and reflects the profile of the contracts that the Division has with Transport for London.

>North America

The 1.0% like-for-like revenue growth for North America includes 8.1% for megabus.com, where the significant drop in fuel prices has resulted in a marked slowing of revenue growth. Stagecoach remains cautious on the short-term prospects for megabus.com revenue growth as the year-on-year fuel price drop persists.