National Express looks for new opportunities to drive the business forward

BIRMINGHAM-based transport group, National Express, has said it plans to build on a strong third quarter by identifying new opportunities for the business.

In a trading update covering the period from July 1, 2014, the company said pre-tax profit for Q3 was some 15% higher than the corresponding period last year as the business progressively recovered the one-offs and currency fluctuations which impacted operations during the first half. Revenue growth, performance improvements and cost efficiencies all contributed to the improving picture, it added.

Dean Finch, Group Chief Executive, said the business was now on target to meet profit and cash expectations for the full year.

“We have made good progress this quarter. We have won new contracts, renewed key concessions, and increased revenues in every division. Our profit last quarter was up on the same period in 2013, helping to offset the one-offs of the first half year. Our cash generation continues to be strong and will remain a focus for the business,” he said

“This quarter again demonstrates that our strategy, rooted in excellent operational performance and customer service, is delivering retention and progression in our existing markets and securing expansion in to profitable new business. It is an approach we are determined to build on as we look at other opportunities in the coming months and years.”

Net debt at the end of September was £50m lower than in September 2013 and the business said it remained on track to deliver its target free cash flow of £150m in 2014.
 
It said it was deploying capital selectively to protect and grow the business, investing in replacement fleet as required. It added it would continue to focus on cash generation in the coming years, developing capital-light opportunities, reinvesting selectively in growth and driving shareholder value.

Highlights during the period included the winning of a 10-year contract to run bus services in Bahrain, opening up the Middle East region for further growth. While elsewhere in its overseas operations it retained and grew its largest Spanish concession to have come up for renewal so far – a €600m total revenue contract for regional coach services in the Bilbao metropolitan region for up to 15 years.

It said these successes followed those earlier in the year such as the retention of the 15 year, £4bn Essex Thameside (‘c2c’) rail franchise; renewal of its largest US Transit contract (‘The Ride’ para-transit services in the Boston area); the retention and significant growth of the Memphis School Bus contract and the successful commissioning of a new Moroccan bus franchise in Tangiers.

The group said it had also seen growth in passenger numbers and revenue in every one of its division so far this year.

UK Bus delivered 4% total revenue growth in the period and 3% year-to-date; UK Coach continued to build on last year’s success, carrying 5% more passengers in the core express network year to date; and UK Rail grew both revenue and passenger numbers and is said to be well advanced on new franchise mobilisation.

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