Stagecoach revenues grow though profits fail to keep up

News stories are free to read. Click here for full access to all the features, articles and archive from only £8.99.

Stagecoach has released preliminary results for the year ended April 30, 2016, showing a 17.3% increase in revenue, though the group’s profits have slowed down.

Group revenue rose considerably from £3.2bn in 2015 to £3.87bn in 2016. Operating profit was down at £171.1m (2015: £217.9m), though once intangible asset expenses and exceptional items were excluded, it stood at £228.8m (2015: £227.1m).

Profit before tax was down by £60.8m at £104.4m, though once the same exclusions were made, it stood instead at £187.4m, an increase of £2.4m. Similarly, earnings per share were down 7.2p at 17.1p, but up 1.0p at 27.7p after exclusions.

Stagecoach CEO Martin Griffiths said: “These are a solid set of results, with further revenue and underlying profit growth.

“We are experienced at managing the challenges we face, and the improvements and changes we are making now should ensure that we continue to have a strong portfolio of sustainable and growing businesses for the long-term.

“We are investing for growth and improving the journeys of our customers through new digital tools, smarter ticketing, and the introduction of greener and more comfortable buses and trains. At the same time, we are taking a prudent approach to controlling costs and ensuring our transport networks meet the changing conditions and requirements of our customers.

“Our locally-managed bus companies have strong partnerships with local authorities, allowing them to deliver tailored transport solutions to help communities get to work, access health and education, and enjoy shopping and leisure. We have been independently assessed as offering the best value fares of any major UK bus operator and our customer satisfaction levels are amongst the best in the sector.

“In North America, we have taken steps to match our inter-city coach services to changing patterns of demand and we are well placed to expand our networks as conditions improve.”

On the EU Referendum, Martin commented: “As with other businesses, we are closely following developments in this area. Although we have little business in Europe outside the UK, we acknowledge the referendum result may lead to continuing economic, consumer and political uncertainty.

“Like other business sectors, we are affected by reduced public spending and factors in the wider economy, such as weakening consumer confidence and slowing growth in both UK GDP and real earnings. Public transport also faces the challenge from sustained lower fuel prices, the related effects of car and air competition, as well as traveller concerns over global security. Nevertheless, we have experienced management teams who are working hard to stimulate growth and we have not significantly revised our expectation of 2016/17 adjusted earnings per share.

“We remain positive on the long-term prospects for public transport and the Group remains in a strong financial position.”