London Midland owner predicts better-than-expected profits

X The Business Desk

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LONDON Midland owner, the Go-Ahead Group, said today it expected to deliver full year operating profits ahead of speculation.

In a pre-close trading update for the year ending July 2, 2011, the transport company said it was pleased with the performance and predicted passenger revenue growth of around 8% in the London Midland operation.

Keith Ludeman, group chief executive, said: “Since the depth of the recession in 2008, Go-Ahead has seen solid growth. Three things are driving growth – improving levels of quality, better marketing of our services, and the higher costs of motoring resulting in the public choosing the better value option of the bus.”

Mr Ludeman will shortly retire and his successor David Brown, who takes over on July 5, added: “The business is trading strongly and has a solid foundation for the future.  My aim will be to build upon the strengths of the business and to take advantage of the opportunities presented.  We aspire to be the premier quality transport operator in the UK, driving value for both passengers and shareholders.”

London Midland’s operational performance has continued to improve and in addition to passenger revenue growth, the firm said it also expected passenger numbers to grow by around 6% in the year.

Its other rail operations include the Southern and Southeastern franchises. It said the former anticipated full year like-for-like passenger revenue and number growth of around 9% and 3% respectively. Southeastern’s passenger revenue and numbers remains strong, with full year expectations at around 9% and 4%, respectively.

Full year rail operating profits will include £9m of contract management benefit, which was achieved in the first half of the year. A further non-recurring contract management benefit of £4m is expected to be realised in the fourth quarter of the year.

The group said it had also seen a solid performance in its deregulated bus operations and passenger revenues were again expected to increase.

In outlook, it said while it was encouraged by its performance this year, it remained cautious on the medium term economic outlook.

Full year results will be announced on September 1, 2011.

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