British public transport operator Stagecoach Group plc (SGC.L) reported Tuesday a higher profit for fiscal year 2012 benefited by revenue growth across its businesses in the UK and North America. This was despite sharply lower operating margin in the UK Rail division due to losses at East Midlands Trains.
Noting that it has made a good start to the new fiscal year, the company raised its dividend. The shares rose 5 percent in morning trade on London Stock Exchange.
According to the company, commuters, business customers and leisure travelers have switched from car and airlines to better value bus, coach and rail services due to high fuel prices and motoring costs.
Chief Executive Sir Brian Souter said, "We continue to see good organic growth in our bus and rail services in the UK and North America. We believe the outlook for our bus and rail services is positive and we look forward with confidence to the year ahead."
For the year ended April 30, pre-tax profit climbed to 239.8 million pounds from last year's 191.2 million pounds.
Excluding certain intangible asset expenses and exceptional items, pre-tax profit slid to 202.5 million pounds from 205.7 million pounds a year ago.
Revenue for the year increased to 2.59 billion pounds from 2.39 billion pounds last year. Like-for-like revenue grew 6.9 percent.
UK Bus -regional operations division continued to perform well with revenue and margin growth during weak macroeconomic conditions and a period of downward pressure on Government spending. UK Bus -London unit's revenues climbed 72.5 percent following its turnaround program that is progressing well and it has won new contracts on more acceptable profit margins, the company said.
In North America, its fastest growing division, a 14 percent like-for-like growth was slightly offset by a 20 basis points decline in operating margin due to increased fuel costs and charges related to sub-contracted megabus.com services. The company said its budget coach brand megabus.com is a relatively small part, yet it offers good growth potential.
The company expects its recent acquisition of certain assets from Coach America would help it expand the US business at a reasonable price while further underpinning the development of megabus.com in targeted regions.
The Directors have proposed a final dividend of 5.4 pence per share, higher than last year's 4.9 pence, making a total dividend for the year at 7.8 pence, up almost 10 percent.
Looking ahead, Chairman Sir George Mathewson said the company has planned further investment in growth over the next year, notably in expanding megabus.com to new locations, bidding for new rail franchise opportunities and in capital expenditure on new vehicles and other assets.
The company added that it is well positioned to withstand any further deterioration in macroeconomic conditions with its solid financing arrangements, robust bus operations and current rail franchises benefiting from the protection of Government revenue support.
In London, Stagecoach shares are currently trading at 262.60 pence, up 12.80 pence or 5.12 percent.
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by RTT Staff Writer
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