Stagecoach Group PLC (LON:SGC) has reiterated its outlook for the current year ending May 1, 2021 as the transport operator said it continued to see “good long-term prospects for the business” as the coronavirus (COVID-19) pandemic began to recede.
In a trading update for its current financial year to date, the company said while it was difficult to accurately forecast the precise impact of the pandemic on its profitability, it said the UK government’s national bus strategy showed a “commitment to increasing bus patronage with significant funding” and as such saw a “positive long-term outlook” for its regional bus business.
READ: UK govt launches regional bus strategy with £3bn for greener buses
The company said regional bus demand over the year had followed the pattern of changing pandemic restrictions across the UK, with commercial sales currently at 46% of 2019 levels although this had recovered to 60% last autumn. Stagecoach added that they were confident sales in the business would grow as lockdown restrictions were eased.
The firm added that while current support measures for bus operators remained in place, it expected to continually generate positive earnings (EBITDA) and an operating profit, while a view to rebuilding profits once restrictions are eased.
Meanwhile, the company said its London bus operation and continued operating at normal levels with a “strong operational and financial performance” and that it expected to report an operating profit slightly ahead of the prior year. The group added that it had also made positive progress in unwinding the affairs of its former rail operations and that it has maintained “further positive cash flow” overall during the period.
"We continue to make good progress in delivering our immediate priorities at this time. Our focus is on protecting and promoting the health and well-being of our colleagues and customers; working in partnership with government and local authorities to deliver the critical public transport the country and our communities need; and protecting the long-term sustainability of our business”, Stagecoach chief executive Martin Griffiths said in a statement.
"We remain confident that there is a strong and positive future for public transport as we emerge from the COVID-19 pandemic. Government commitments in the recently published National Bus Strategy provide a huge opportunity to fundamentally transform mobility in our communities, moving away from towns and cities built around cars to more vibrant and prosperous places well-connected by easy-to-use sustainable public transport and active travel”, he added.
In a note on Friday, analysts at Peel Hunt retained their ‘buy’ rating and 125p target price on the stock, although they said it did not appear that social distancing measures will be relaxed until mid-to-late summer, meaning that the group’s recovery in revenue and profitability “will begin slightly later than we had expected”.
Stagecoach shares jumped 2.6% to 96.2p in early deals.