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National Express heads north after strong third quarter

National Express heads north after strong third quarter

National Express (LON:NEX) shares travelled north as it unveiled a strong third quarter, in which it won new contracts abroad.

The period saw it win a decade long contract to run bus services in Bahrain opening up the Middle East as a region for further growth.

The company also hung on to its largest deal in Spain - the €600 mln revenue contract for regional coach services in the Bilbao metropolitan region for up to 15 years.

Pre-tax profit for the period from July 1 to date was nearly 15% higher than the same period last year and the firm is on target to meet its profit and cash expectations for the full year, it said.

Meanwhile, it said revenue was growing in Asia with the numbers of passengers growing on all but one of the rail competed corridors and revenue has now recovered to last year's level.

The UK bus business delivered a 4% increase in revenue in the three months from July 1 to now, while the UK Rail has grown both revenue and passenger numbers and is well advanced on new franchises.

Chief executive Dean Finch told investors: "We have made good progress this quarter. We have won new contracts, renewed key concessions, and increased revenues in every division.

"Our profit last quarter was up on the same period in 2013, helping to offset the one-offs of the first half year. Our cash generation continues to be strong and will remain a focus for the business."

City firm Investec noted the news should see should see a modest relief rally in the shares.

It said the stock looked relatively cheap in a sector context although, in the absence of new catalysts, it repeats a 'hold' stance. The target price is 250p from 276p previously.

Shares rose 4.17% to 245p each.

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