Shares in National Express Group PLC (LSE:NEX) jumped over 10% following strong results for the first half of 2022.
The transport operator maintained its guidance for the current year after reporting its highest revenue growth in over a decade for the first six months on the back of a strong rebound in passenger demand.
Revenue jumped 34% to £1.3bn in the half-year to 30 June 2022, while underlying profit (EBITDA) climbed to £197.8mln from £128.2mln in the first half of 2021, the FTSE 250 company revealed in its earnings release.
At the statutory level, the FTSE 250 company returned to the black with a pre-tax profit of £20.5mln, compared with a loss of £50.2mln.
Recovery in demand is continuing across the group, with passenger journeys rising 29% in the first half, the company said.
It added that momentum is picking up across the business, with the second quarter showing stronger sales growth than the first three months of the year.
The company won 16 new contracts in the first half and has a growing pipeline, with £2.1bn of bidding and inorganic growth opportunities.
Based on the strong interim performance and new contracts, it said it is “confident” in its full-year guidance and still expects to reinstate a full-year dividend for 2022.
Recovery in the UK coach business is expected to build in second half, the company said, and forecast that the UK division will return to full-year profit.
Against a backdrop of rising fuel prices, National Express said it has hedged 100% of its fuel for 2022 and 75% for 2023.
It also said wage rises are manageable across the group, with pricing being ahead of cost inflation on contract renewals in North American School Bus, where wage inflation is “most acute”.
However, it noted some margin pressure until all North American School Bus contracts are renewed and driver vacancies are filled.
"I am pleased to see momentum building across the group, with strong growth in revenue, profit and cash in the first half. Our Evolve strategy is delivering results and we are increasingly demonstrating our ability to rapidly mobilise safe, high quality operations on which our customers can rely,” commented group chief executive Ignacio Garat.
He cautioned that the group is facing challenges. “We believe, however, that we are well positioned in an inflationary environment; resilient to slowing economic growth; and are taking all the steps we can to mitigate the industry-wide shortage of School Bus drivers in the US.
“Whilst mindful of these challenges we maintain our full-year guidance and continue to anticipate reinstating a full-year dividend in respect of FY 2022,” he said.
Shares rose 10.11% to 197.20p in morning trade.