Stagecoach to step away from UK rail as profit slides
By Duncan Ferris
Date: Wednesday 26 Jun 2019
(Sharecast News) - Stagecoach reported a drop in overall profits on Wednesday, following losses associated with the disposal of its North American business, and added that it will not bid for further UK rail franchises.
The FTSE 250 passenger transport operator recorded a total profit of £23.6m for the year ended 27 April, down 63% compared to the year before, having booked a loss of £23.8m on the disposal of its North America division.
However, the total proceeds helped to reduced consolidated net debt by 36% to £253.3m over the course of the year.
Meanwhile, revenue fell by a third to £1.88bn as two of the company's franchises ended, though profit before tax from continuing operations was up to £132.9m from £128.3m.
Stagecoach said it could lose its UK rail business, which raked in more than half of its revenue in the 2018 financial year, after its attempts to renew existing East Midlands and West Coast rail franchises with partners were disqualified over pension responsibility concerns, leading the company to sue the Department for Transport, alongside its partners, the French state railway operator SNCF and Virgin.
Revenue from the division contracted by 62% to £589.5m across the year, and Stagecoach said it had no plans to bid for new UK rail franchises based on the current risk profile, with franchised rail operations therefore expected to end in November 2019.
Following the sale of its North American division and contraction of UK rail, Stagecoach said it has repositioned to drive long-term profit growth from UK bus business, which enjoyed 0.4% revenue growth to £252.8m in London and 2.9% revenue growth to £1.04bn in other regions.
The company kept guidance unchanged as it said it has made satisfactory start to the current year and sees positive long-term prospects for public transport due to opportunity for a modal shift from cars to public transport against a backdrop of technological advancements, rising road congestion and increasing environmental awareness.
Martin Griffiths, chief executive of Stagecoach, said: "Our priority is to provide safe, high quality, value travel where every customer matters. We are leading the way in making travel easier for our customers through innovation and continued investment in our people, fleet and technology. Partnership working and new commercial initiatives are delivering positive results and high customer satisfaction."
Stagecoach's shares were down 1.28% at 116.10p at 0832 BST.
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