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International bus and rail operator Stagecoach Group plc (LSE:SGC) said it is in a good start for the current financial year, despite a slight drop in profit in 2011, caused by the poor performance of its UK rail division.
Reporting its final results for the year ended 30th April 2012, Stagecoach said it benefited from “high fuel prices and motoring costs” that boosted the group’s revenue by more than 8% to £2.590 billion.
“High fuel prices and motoring costs have resulted in commuters, business customers and leisure travellers switching from the car and airlines to our better value bus, coach and rail services,” Stagecoach Chairman, Sir George Mathewson, stated in his report.
However, the group’s East Midland Trains incurred losses during the first half of the fiscal year and hurt the group’s UK rail division’s profit by 43% to reach only about £27 million, compared to the £48.4 million it earned a year ago, despite “revenue support” accorded by the British Government.
Stagecoach’s share of profits from its 49% owned Virgin Rail Group also fell by 44%, down from £28.4 million in 2011 to £15.9 million in 2012.
As a group, Stagecoach was able to able to achieve operating profit before intangible asset expenses and exceptional items of £237.2 million, down £3 million from the previous year’s £240.2 million.
London 2012
As London waits for the culmination of the 2012 Olympics and Paralympic Games, Stagecoach said it looks forward to playing a key role in the successful delivery of the events.
The group will become a transport provider for athletes and media during the competitions, Stagecoach stated.
US Expansion
Momentum has not stopped Stagecoach, despite a broader economic weakness, as shown by the group’s expansion of its operations, especially in the North American division.
“We are expanding to new locations in North America where the response to the product from consumers has been particularly strong,” Sir Brian Souter, Chief Executive Officer of Stagecoach commented.
An acquisition worth US$134 million of businesses and assets from Coach America, Inc. was agreed upon in May 2012, in a bid considered as one of the excellent prospects for long-term growth.
Revenue for the North America division reached US$312.6 million, up from $295.1 million a year ago for an operating profit of $19.7 million.
“North America is the fastest growing division in the Group… and we have a clear plan to roll-out our services to new parts of the United States.”
CEO Comments
Sir Brian Souter, Chief Executive Officer of Stagecoach Group, commented on the future of the business, saying:
“Across our business, our new ideas and partnerships are helping shape the future of public transport and the Stagecoach difference is delivering strong returns to our shareholders. We believe the outlook for our bus and rail services is positive and we look forward with confidence to the year ahead.”
Company Spotlight
Stagecoach Group plc is a leading international public transport group operating bus, coach, rail, and tram services in the UK, United States, and Canada.
Part of the FTSE 250 index, Stagecoach share price closed 5.48% more to £2.63 per stock, trading in London.
