MIDLANDS-based transport group National Express has announced a 26% fall in interim revenues despite recording a 36% improvement in pre-tax profits.
Issuing its half-yearly results, the group said it had enjoyed a “strong first half performance, building on a stable financial platform, a clear margin improvement plan, a selective investment programme and a proactive approach to meeting the needs of all our stakeholders”.
Revenue during the period declined from £1,424.5m this time last year to £1,059.6m meanwhile, pre-tax profits rose from £55.7m last year to £75.7m. The group also reduced its debt levels from £977.5m to £601.1m.
Commenting on the results, Dean Finch, National Express Group chief executive, said: “Progress in the first half has been good. With a strong financial platform, National Express is now delivering the benefits from its business improvement programmes. Despite challenging economic conditions, greater operational focus is having a positive impact and we will continue to progressively drive improvement in performance and cut costs.
“We have secured growth opportunities, particularly in North America and Spain, in which we will selectively invest in the second half of the year. We expect trading to remain resilient in the next six months and we look to the future with confidence.”
Looking ahead, it said that despite the challenging economic conditions in all its markets, underlying revenue had stabilised and it expected trading to remain resilient during the second half, meeting expectations.
It has blamed the fall in revenue on the return of its failed East Coast rail franchise and the sale of the Travel London bus business, both of which were completed last year. Adverse currency exchanges also had an impact.
Taking this into account, underlying revenue was broadly flat. The group said this reflected the tough economic conditions and the impact of reduced operating mileage.
However, it said there had been a general improvement in the overall revenue trend compared with 2009, with the decline in Spain slowing, growth in UK Coach and North America winning contracts to secure growth in the second half of 2010.
Its UK Coach division saw a steady start to the year, a seasonally quieter period and following a record profit in 2009. Revenue in the first half was £118.2m, up from £114.2m last year. Revenue growth was strengthened, supported by additional investment.
A number of new growth opportunities have been secured. It said the new Birmingham Coach Station was proving a success with customers and now housed divisional and corporate management teams.
Up to 2009, UK Bus revenue growth had slowed and margin declined as costs rose sharply. In the first half of 2010, it achieved an initial improvement in margin, benefiting from the sale of the Travel London business and a reduction in operating costs from improved network efficiency.
Underlying revenue in its Travel West Midlands bus operation reduced by 1%, as passenger volume growth was offset by a 5% reduction in operating mileage, the first part of a network optimisation programme to improve efficiency and move capacity to high demand corridors. As a result, passenger revenue per mile increased by 4%. Fare yield fell slightly as prices were held to encourage travel. Concessionary fare income was broadly flat, reflecting the renewal of the scheme with Centro.
The group said it was also looking to invest in its Coventry operation in an effort to offset losses from the Midland Metro business.
