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Stagecoach sees rise in pre tax profits

Article By: ,  Financial Analyst
June 24, 2015 6:36 PM

Stagecoach has reported a nine per cent increase in revenues in the year to April 30th, bringing the figure to £3.2 billion.

The transport group's positive results can be attributed to a strong demand for train travel in the UK, as profits rose by 2.4 per cent to £185 million, despite a decrease in bus passengers.

The Perth-based transport company runs a joint-venture with Virgin Rail to serve the London-to-Scotland East Coast Main Line. This saw earnings climb to £28 million from £2.6 million a year earlier, reports the BBC.

Stagecoach's wider UK rail business also includes South West Trains and East Midlands Trains. Both of these businesses saw earnings drop to 22 per cent to £26.9 million due to rises in premium payments to the UK government. However, a rise in passenger numbers helped to increase revenue by 18.1 per cent at the division.

Commenting on the results, chief executive Martin Griffiths said: "These are a solid set of results, not withstanding continued tight central and local government spending and increased competition for public transport from the private car driven by lower fuel prices."

Decrease in bus passengers

While rail travel has been on the rise, earnings from bus travel for the group have fallen short of targets set earlier this year.

One reason for a fall in bus travel has been the drop in petrol prices – the company's coach service operations in the US also saw a decline in profits. However, Stagecoach has also said the fall in fuel costs will ultimately help the group by lowering business costs for the next two financial years.

"The sharp reduction in oil prices during the year resulted in a fall in car operating costs," explained Mr Griffiths.

"The increased competitive advantage this gave to cars affected the profitability of some of our businesses, most notably ourmegabus.com inter-city coach operations in North America," he added.

However, he said he expects further opportunities in continental Europe as governments liberalise inter-city coach services.

Megabus, one such European coach service has seen new domestic networks in Germany and Italy and passenger volumes in mainland Europe have increased by more than 60 per cent in the past year.

At 16:30 BST, Stagecoach stocks were up 2.56 per cent to 416.60.​

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