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National Express enjoys growth across all divisions

Highlight of the month was the Spanish business, where revenue revved up 11.8% in constant currency or 7.8% on a like-for-like basis

National Express
National Express has launched a trial of an on-demand coach service focusing on large events

National Express Group PLC (LON:NEX) has grown sales across its bus and rail divisions, in the UK, US, Spain and Germany in the first quarter of 2019.

Group revenue was driven 8.3% higher on a constant currency basis in the first four months of the year and management said the group was “on target” to meet full-year targets for revenue, profit, cash flow and leverage.

The largest unit, North America, also increased revenue by 8.3% but this was boosted by swings in the US dollar, with like-for-like revenue up 3.2%. The division, which runs school buses and offers corporate transit services, was hit by school closures due to severe snow during the period, with a US$4.5mln incremental year-on-year profit impact, although a “sizeable proportion” of the lost schools days is expected to be made up within the rest of the first half of the year.

National Express acquired a majority stake in the Silicon Valley-focused WeDriveU employee shuttle business, which the company said “transforms our credentials in a very attractive nationwide market”, with a further small acquisition also made in the period of a transit operator in Arizona to break into the “growing non-emergency medical transportation services market”.

Highlight of the month was the ALSA Spanish business, where revenue revved up 11.8% in constant currency or 7.8% on an LFL basis. All segments in Spain, Morocco and Switzerland grew strongly, with revenue up 9.1% during the Easter period and passenger numbers increasing 5.5%.

The unit’s largest bus franchise, in Bilbao, was renewed for another 10 years, though Spain’s long-haul concession renewal process is still up in the air, with no material impact expected on earnings before 2021.

UK sales were mixed, with the coach business up 7% but bus up 1.8%, or up 4.4% overall. The coach business renewed the contract for shuttle services at Stansted Airport for another five years, while a trial has begun of its NEON on-demand coach service focusing on large events.

The UK bus business was driven by an increase in commercial patronage of 1.6%, up from 1.1% last year, plus growth in tendered contracts and with commercial revenue per mile growing 4%. Ahead of the start of Birmingham's Clean Air Zone on 1 January 2020, the bus fleet “will be fully-compliant” and the division is “well-advanced in developing options to support the policy's ambition to secure significant modal shift”.

The German rail services grew underlying revenues 5.2%, with the next contract of three on the Rhine-Ruhr Express routes “firmly on-track” ahead of its start in June.

Broker Liberum noted that price increases in the current contract bid season were averaging 5% and fully offsetting driver wage inflation, but net losses of 1000 buses "is perhaps a touch higher than ideal at this stage".

National Express shares were down almost 1% to 410p on Thursday morning. 

Quick facts: National Express

Price: 446 GBX

Market: LSE
Market Cap: £2.28 billion

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