GOG.L Share News (GOG)

(Sharecast News) - Go-Ahead Group reported a group operating profit of ?60m in its first half on Thursday, down from ?64.5m year-on-year, with the company "slightly" reducing its full-year expectations as a result of cost pressures and adverse weather in its regional bus operations.
The FTSE 250 passenger transport operator said that was off the back of revenue of ?1.97bn for the six months ended 28 December, which was up from ?1.92bn in the first half of the 2019 financial year.

Its profit before tax slid to ?49m from ?61m, which included a ?2.1m negative effect from the impact of IFRS 16, while its basic earnings per share fell to 64.6p from 93.2p, including a negative 4.4p movement from IFRS 16.

Go-Ahead said that, while it was "unclear" how the coronavirus situation would evolve in the coming weeks, travel patterns were "likely" to be impacted in the second half of the year.

Operating profit in its bus division was down 3.4% at ?45.3m, with the company saying strong performance in London and its international operations helped to offset a weaker regional bus result.

Rail operating profit totalled ?14.7m, down from ?17.6m year-on-year, which was in line with expectations, as UK rail results offset the impact of a "difficult start" to operations in Germany.

Go-Ahead maintained its interim dividend at 30.17p.

On the operational front, the firm reported "record" punctuality levels at both the Govia Thameslink Railway (GTR) and Southeastern rail franchises, supporting improved customer satisfaction scores of 82% and 81% respectively.

Its regional bus customer satisfaction, meanwhile, was said to remain "industry leading" at 92%.

Go-Ahead said it was in the final stages of discussions with the Department for Transport (DfT) over a potential direct award contract for Southeastern beyond its scheduled end date of 31 March 2020.

The company's first rail contract in Norway began in December, as the company also expanded its rail services in Germany and bus services in Ireland during the period.

A 'group taskforce for climate change' was established during the half-year to lead the firm's progress towards its 2021 target to reduce carbon emissions by 25%, and its 2035 target to run a zero-carbon bus fleet, as it also announced a further roll-out of its "air filtering" bus.

Go-Ahead also noted that a total of 1,400 apprentices had been trained since the scheme's launch in late 2018, while the 'Women in Bus' network was supporting its target to double female representation in the bus division by 2025.

"Our London and international bus business is performing well and in line with expectations for the full year, while our expectations for our regional bus business have slightly reduced, reflecting cost pressures and adverse weather on passenger travel," said group chief executive officer David Brown.

"In rail, while we await the outcome of the Williams review, our current UK operations are performing well and we are in the final stages of discussions with the Department for Transport regarding a potential direct award contract for Southeastern.

"The stronger-than-expected UK rail performance has offset the impact of operational challenges in the first six months of running our German rail contracts."

Brown noted that the company began running rail services in Norway in December, where it was delivering "high levels" of operational performance.

"In the second half of the year our focus will be on continued management of our regional bus cost base, integrating new contracts and recent acquisitions, and improving our German rail operations.

"While it is unclear how the coronavirus situation will evolve in the coming weeks, travel patterns are likely to be impacted in the second half of the year."

Brown said he was "pleased" with the progress the company was making towards its vision of "a world where every journey is taken care of", pointing to its customer satisfaction scores in regional bus, as well as at GTR and Southeastern.

He noted that the firm was also helping to drive up customer satisfaction and performance in bus markets in Singapore and Ireland, where tendering authorities had opened up to commercial operators.

"We have long been campaigning for a national bus strategy to maximise the benefits that buses bring to local communities and society as a whole.

"I'm pleased with the government's decision to move forward with such a strategy and its commitment to invest ?5bn in bus and cycle networks in the coming years.

"This commitment recognises the part public transport can play in protecting our environment, supporting our communities, improving our health and wellbeing, and growing our economy."

At 0842 GMT, shares in Go-Ahead Group were down 18.61% at 1,369p.