National Express predicts profits ahead of expectations
BIRMINGHAM based transport group National Express made strong progress during the fourth quarter with on-going growth in year-on-year profitability.
As a result of the strong performance, the board said it now expected pre-tax profits to be ahead of current market expectations and markedly stronger than was expected back in January 2010.
The company said all parts of the business had performed well with good revenue generated in its UK coach and rail operations. Margin recovery in the UK bus market was also strong, while its businesses in North America and Spain were also stronger.
Dean Finch, group chief executive, said: “2010 has been a year of tremendous progress for National Express. This is now a much improved business, back on a sound footing and with a strengthened management team, delivering stronger margins and better customer service.
“We will complete our business recovery programme ahead of schedule, and will look to grow our bus, coach and rail portfolio, leveraging our international presence, and delivering value for customers, stakeholders and investors alike.”
The company launched a business recovery plan for its bus operations during the summer and it said this was now delivering ahead of expectations.
The target was to reach industry average margins over time and to achieve this it implemented a three part programme aimed at delivering a package of revenue and service improvements, better network utilisation and reduced operating costs.
As a result, the firm has been able to start a five-year investment plan to boost capacity and modernise the fleet, especially on high frequency routes in the West Midlands.
The plan has seen underlying revenue grow 1.5% since July. Network mileage has reduced by 4% over the same period, driving up operational efficiency, while cost reduction benefits are building. Consequently, the bus operation will achieve industry average margins in 2010, well ahead of schedule.
Its UK Coach business has continued to trade well, with underlying revenue growth of more than 3% in the year to date.
The Express coach business is being reorganised around its key segments to ensure a sharper focus, create new journey opportunities and improve revenue management. Its Airports business has also fared well, renewing its five year contract with BAA to operate Heathrow Central Bus Station.
Significant gains are expected to continue and the firm said it did not foresee any problems as a result of changes to the concessionary fare scheme next year.
In UK Rail, underlying revenue was 7% higher during Q4. It said with the East Anglia franchise extended to October 2011, this month had seen the initial delivery of a £185m investment to provide 10,000 additional seats in the peak commuter period.
Despite the fiasco of the East Coast Main Line, where it was forced to hand the franchise back to the Government, the group said it still intended to bid for both the short contract extension and the remodelled longer term franchise in East Anglia.
The group said it was fully in favour of the new franchise framework and believed it could create significant value for customers, shareholders and stakeholders.
For latest National Express share price click here
