Transport giant Stagecoach cautious as revenues dip
Stagecoach has issued a cautious trading update following a period of declining revenues in its UK bus business and slower growth in British rail operations.
Despite a weaker start to the current financial year to 29 April, 2017, the Perth-based business did not change its guidance on earnings.
It did, however, flag up a “higher than usual degree of forecasting uncertainty” because of a lack of clarity on the outlook for the UK economy. Like-for-like revenue at the group’s London bus business was 0.9 per cent lower during the 16 weeks to 20 August as it suffered from a small net reduction in contracts with Transport for London. During the same period, Stagecoach’s regional UK bus revenues fell 1.9 per cent.
“This is partly attributable to weak underlying local economic conditions in some parts of the UK and sustained lower fuel prices,” said the board, headed by chairman and co-founder Sir Brian Souter.
UK rail revenues rose 1.7 per cent, compared to a rise of 2.8 per cent during the same period last year. This includes the wholly-owned South West Trains and East Midlands Trains franchises.
Revenues at Virgin Rail Group – a joint venture with Virgin to run the West Coast mainline – were up by 4.7 per cent, but North America revenues declined 3.3 per cent in the four months to 31 August. The US business is also being impacted by “sustained lower fuel prices”, which makes competing forms of transport such as car or flights cheaper.