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Stagecoach leaves 2018 earnings forecast unchanged despite lower bus revenues in first half

For the six months ended October 28, the FTSE 250 listed transport operator reported adjusted pre-tax profit of £96.7mln, down slightly from the £97.2mln posted a year earlier
Stagecoach bus
Stagecoach’s chief executive, Martin Griffiths, said: "We have made positive progress across our businesses"

Stagecoach PLC (LON:SGC) shares rose as the transport firm left its 2018 earnings forecast unchanged despite lower bus revenue and passenger volumes in the first half, with improved revenue trends in North America.

In early morning trading, Stagecoach shares were up 4.8%, or 8.4p at 184.8p.

For the six months ended October 28, the FTSE 250 listed transport operator reported adjusted pre-tax profit of £96.7mln, down slightly from the £97.2mln posted a year earlier, while revenue fell by 10% to £1.80bn.

READ: Stagecoach and FirstGroup boosted by government’s plans to overhaul Britain's rail network

Stagecoach’s chief executive, Martin Griffiths, said: "We have made positive progress across our businesses. In UK rail, we are working with the Department for Transport towards new contracts at Virgin Trains East Coast and Virgin Trains West Coast.”

He added: “Our East Midlands Trains franchise has been extended through to March 2019, with the prospect of us agreeing a further direct award franchise from March 2019, and we are part of shortlisted bids for new South Eastern and West Coast Partnership franchises.”

The boss pointed out: “In bus, the actions we have taken on pricing, services operated and commercial initiatives across our regional UK bus operations are delivering the results we expected, while our London bus business has had success in winning new contracts. 

“In North America, we have seen improved revenue trends, new contract wins and growth in profit.” 

Griffiths concluded: “We are focussed on making further progress in the second half of the year and have maintained our expectation of full year adjusted earnings per share."

The group maintained its interim dividend at 3.8p.

Consensus "unlikely to change materially"

In a post-results note to clients, analysts at Liberum Capital; said: “The results were ahead of our forecasts, although outperformance was driven by Rail and appears potentially one-off.”

They added: “The other divisions were in line to slightly ahead, with UK Regional Bus seeing stable revenue after operating mileage cuts and defending margins at attractive levels. FY outlook unchanged, so consensus unlikely to change materially.”

Liberum maintained a ‘buy’ rating and 170p price target on Stagecoach.

 -- Adds share price, analyst comment --

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