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Underlying earnings double at Stobart Group

Last updated: 12:54 27 Oct 2016 BST, First published: 07:54 27 Oct 2016 BST

Airplane
Shares rose 4.7% on the results

Logistics company Stobart Group Limited (LON:STOB) said CityJet is to start operating flights from London Southend Airport next year.

CityJet is expected to fly to 18 destinations from the airport, Stobart announced in its interim results.

“These additional services could bring up to 600,000 passengers per year to the airport providing us with further momentum towards achieving our target run rate of 2.5 million passengers by 2018,” chief executive Andrew Tinkler told investors.

In the six months to the end of August revenue from continuing operations clocked in at £65.3mln, up 13% from £57.6mln in the corresponding period of last year.

Underlying earnings (EBITDA) doubled to £20.2mln from £10.0mln the year before while underlying profit before tax soared 252% to £16.2mln from £4.6mln last year. Tight cost controls and enhanced commercial performance should lead to an improvement in EBITDA over the full year, the company said.

The UK's leading supplier of waste wood biomass fuel to renewable energy plants said revenue and volumes in its Energy division were more or less unchanged from a year earlier, with increased volumes on certain contracts and improved margin performance offset by a reduction on certain export contracts.

The company said that the UK's decision to leave the European Union has had a short-term impact on business development, with some airlines delaying further investment in their UK operations. On the other hand, the new deal with CityJet underlines the group’s confidence in its ability to deliver the anticipated growth in passenger volumes, although this financial year volumes are likely to be on a par with the previous year.

Stobart Aviation has continued to manage its costs, while various business initiatives have led to an improvement in revenue per passenger compared to the same period last year. The investment in an enlarged duty free store, by World Duty Free, is anticipated to boost revenue per passenger even more next year.

“Stobart Rail continues to cement its position as a leading partner to Network Rail and to secure further civil engineering contracts for other major projects,” CEO Andrew Tinkler said.

During the reporting period, Stobart sold 47 acres of investment property at Speke, in Liverpool, resulting in a profit on disposal of £11.6mln in addition to the £9.1mln revaluation gain recognised last year.

“It is extremely pleasing to see that we have achieved significant returns on investment from our property assets. The Speke transaction is an excellent example of this. The total gain since the acquisition of this investment property is £20.7 million, taking into account the £9.1 million revaluation gain in 2016," Tinkler said.

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