National Express sees big improvement in profits
NATIONAL Express made a 38% improvement in pre-tax profits last year with the transport group claiming the recovery was ahead of schedule.
The Birmingham based group said pre-tax profits rose to £160.5m, from £116.2m in 2009, based on revenue of £2.12bn – down 22% on 2009’s £2.7bn.
Dean Finch, National Express chief executive, said: “This is a renewed company. Our much improved financial performance provides a platform to drive further growth, continue targeted investment and restore a dividend. With a clear focus on our strategy we are confident in the year ahead.”
The firm said 2010 had been a year of transformation.
In its full results statement, it said: “We are ahead of plan in our Business Recovery, delivering significantly improved margins and returning to underlying revenue growth. With this sound financial footing, we have restored the dividend and we are driving forward performance, delivering value for all shareholders.”
Mr Finch said the group had delivered margin improvement by embedding cost management and operational efficiencies across the group. These had helped to provide a sound financial platform with a continued focus on cash generation.
He said the strategy now was to continue improving performance, secure organic growth and in time, develop new market opportunities.
“We are leveraging our unique geographic footprint across all modes of public transport, together with our group-wide synergies. Despite the economic challenges that we face, we are creating a stronger business to deliver future value to shareholders,” he said.
Margin performance improved through cost control, fare yield management and a focus on operational excellence across the business. Group normalised margin rose from 5.9% in 2009 to 9.6% in 2010. Normalised operating profit increased over £44m to £204.2m, from £159.8m in 2009.
Excluding rail operations, normalised pre-tax reached a record level in 2010 and the firm said it was now focussed on rebuilding a high quality business across all its markets.
Cost management and operational efficiencies were led by the group’s North American division, which is centred around school buses. Its Spanish operation also improved, boosted by contract wins.
Driving margin through improved yield management turned its UK Bus operation, which includes Travel West Midlands, from one of the worst in the industry to one of the best. Normalised operating profit increased 48% to £28.3m. This was partly achieved by rebalancing fares between cash tickets and travelcards, improving the revenue mix and managing the bus network more effectively.
Cost reduction was also a key aspect of improved performance, with the number of depots reduced, pay grades restructured and improved engineering efficiency. It is now looking at buying up new vehicles to improve the fleet.
The UK Coach division consolidated its position in 2010. Underlying revenue grew by 3% year-on-year, but additional investment saw the margin decrease, from 14.1% to 12.8%, as the group invested in marketing, new facilities and in tactical promotional campaigns.
Following the East Coast Mainline fiasco, the company said its goal for rail operations was to ensure it remained profitable. It will operate the National Express East Anglia until February 2012 – two years earlier than originally planned – and c2c until May 2013.
