Strong rail division boosts London Midland parent
LONDON Midland operator Go-Ahead Group has said robust trading across its bus and rail operations has led to operating profit slightly ahead of board expectations
In a trading update, the group said business in the six months to December 31, 2011 had been strong enough to deliver operating profit for the full year to June 2012 slightly ahead of previous expectations, primarily due to the good performance of its rail division.
David Brown, group chief executive of Go-Ahead, said: “While we remain suitably cautious about the medium term wider economic outlook, trading in both our bus and rail divisions continues to be strong, with record numbers of passengers using our services.
“This demonstrates the resilience of public transport during challenging economic times as passengers seek convenient and value-for-money alternatives to the private car.
“All three of our rail franchises are showing a strong performance. In particular our smallest franchise, London Midland, is achieving double digit growth in both passenger revenue and volumes.”
The group’s rail division operates the Southern (including Gatwick Express), Southeastern (including High Speed) and London Midland franchises through its 65% owned subsidiary Govia.
“All three franchises are performing well. We expect Southern’s passenger revenue to increase by over 9% in the first half, and passenger journeys by around 3%. Southeastern is expected to see similar growth in passenger journeys, with revenue rising by around 9%. London Midland has been the outstanding performer, with passenger revenue up around 13% and passenger numbers by 10%,” it said in a statement.
It said it remained cautious about the wider economic outlook, but continued to see robust performance across both its divisions, leading it to predict full year operating profit to be slightly ahead of estimates.
“Our cashflow and balance sheet remain strong, underpinning our dividend policy, providing support in the event of a downturn in the economy and allowing flexibility to pursue further value-adding opportunities,” it said.
