Go-Ahead Group PLC (LON:GOG) has said it is confident that it will deliver full-year results “slightly ahead of its previous expectations” helped by improved efficiency measures on its Southeastern rail contract.
In a trading update for the period from 31 December 2017 to 23 May 2018, the FTSE 250 listed bus and trains operator’s chief executive, David Brown, said: “In a challenging market environment with reduced retail footfall and pressures on local authority budgets, our businesses have performed well overall.”
READ: Go-Ahead shares steer lower on Deutsche Bank downgrade
He added: "In bus, our London operations have seen an improvement in service performance resulting in higher Quality Incentive Contract income. Revenue and passenger trends remain mixed across our regional bus businesses.
Brown continued: "In rail, trading has been good in the period, largely due to efficiency improvements and helped by the resumption of full Southeastern services through London Bridge station. In partnership with the industry, this week we began the introduction of the largest timetable change in decades.”
Go-Ahead, which also operates the GTR rail franchise, said Southeastern passenger revenue growth has been around 3.5% in the year to date, with the number of passenger journeys up around 1%.
For its buses business, London revenue growth was around 3% in the period, but regional bus revenues were flat with the adverse weather dampening growth rates since the half-year
The group, which has made headlines over the last two years due to strikes on its rail services, cancellations, and this week, a huge timetable change, also revealed that it has been named preferred bidder for a second bus tender in Dublin by Ireland's National Transport Authority.
Muted share price reaction
In a note to clients, analysts at Liberum Capital commented: “The likely modest upward pressure on consensus estimates is notionally positive, but with the main uplift coming in Rail, and from a franchising expiring in less than a year’s time, we expect the share price reaction to be muted.”
Liberum repeated a ‘buy’ rating and 1,810p price target on Go-Ahead shares, which in mid-morning trading were up 0.6% at 1,861p.
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