National Express beats targets and raises dividend after strong year
BIRMINGHAM-based transport group National Express has beaten its annual targets and increased its dividend to reflect a growing confidence in the business.
In its full year results the company said it had delivered a strong financial performance in 2013. Normalised group pre-tax profit was ahead of target at £143.m, including a fourth consecutive year of record profit in its core non-rail businesses. Group revenue grew 3% and it generated over £180m of free cash flow, again ahead of target. The recommended full year dividend of 10p is up 3% year-on-year.
Group revenue rose to £1.89bn (2012: £1.83bn), with 7% growth in total non-rail revenue, while normalised operating profit from the core non-rail businesses reached a record £185.5m (2012: £185.2m).
It said the normalised pre-tax profit figure of £143.7m (2012: £164.1m) reflected the handover of the National Express East Anglia franchise during 2012.
Core non-rail return on capital employed (ROCE) increased to 11.1% (2012: 10.6%) and free cash flow reached £182.8m, over £30m ahead of target (2012: £140.8m).
Net debt was reduced by over £80m to £746.1m (2012: £828.2m) and the firm said it was on track to reduce net debt to around 2x EBITDA by the end of 2014.
Dean Finch, National Express Group chief executive, said: “National Express has made important progress in 2013. These results show how we have been able to address the headwinds facing the group at the start of last year.
“We beat our targets, especially on free cash flow, and have raised the dividend to reflect our confidence. I am particularly pleased with the strong growth in UK Coach, following its difficult year in 2012, and our performance in North America.
“We also made important strides in business development during 2013. We entered new markets, most significantly Germany. We have won important new contracts and are shortlisted for a number of rail franchises in the UK and Germany. We entered 2014 actively working on a £10 billion pipeline of opportunities.”
Business highlights saw passenger revenue at its UK Coach operation rise 7%, with operating margin over 9%. Its North American bus operation saw revenue exceed $1bn, up 10%, with almost $200m of operating cash generation and Return on Assets target exceeded. New contracts were also secured for its operations in Spain and Morocco.
In its rail division, bids were submitted for Essex Thameside and Crossrail competitions, while its c2c franchise achieved an industry-leading performance for the second consecutive year.
One of the biggest highlights was the £1.8bn of revenue secured from new markets, including rail contracts and coach services in Germany. In addition, it said its new business pipeline was worth over £10bn in revenue.
