New business and organic growth keeps National Express on the right road
BIRMINGHAM-based transport group National Express has seen revenue grow by 7% in the first half fuelled by new a mixture of new business and organic growth.
The group, which operates transports services in the UK, Continental Europe, North Africa and North America, said the performance in the first six months had been in line with expectations.
It said it continued to make strong progress in its three core areas of focus: organic growth and operational excellence, cash generation and business development.
It said that in the case of organic growth, underlying revenue trends across its five divisions improved during the second quarter.
Its UK Bus division, which includes Travel West Midlands, saw growing commercial and concession revenues. Its UK Coach division benefited from lower pricing, alongside new services. In Spain, fare increases and new contracts were helping to bolster the business in what was an austerity-conscious market. Its North America School Bus division also saw an improved return on capital.
In terms of cash generation, the group said it was on course to deliver between £125m and £150m of free cash flow in each of 2013 and 2014. It continues to target a gearing of two times EBITDA by the end of 2014 and to drive returns for shareholders. It said this was supported by a dividend policy prudently covered by non-rail earnings.
The business is also strengthening its pipeline of new business. During the first half, it has:
o increased North America Transit annual revenue to $75m,
o profitably integrated its recent acquisition in Bilbao,
o secured an extension to the c2c UK rail franchise,
o pre-qualified for the Crossrail project,
o secured and commenced mobilisation of two new German rail contracts,
o launched scheduled coach services in Germany,
o secured two major partnerships in UK Coach, with Luton Airport and Ryanair,
o successfully commenced our new Guadalajara contract in Spain, and,
o been selected as preferred bidder for a third Moroccan bus contract, in Tangiers.
It said the business pipeline development had the potential for meaningful earnings enhancement in the medium term.
Dean Finch, Group Chief Executive, said: “I am pleased with our revenue improvement across the business, reflecting the attractive value and quality service we offer our customers. I believe that the combination of organic growth and operational excellence, cash generation and new international contract opportunities will drive returns for National Express and our shareholders.”
The group will announce its half year results on July 24, 2013.
