LONDON (Alliance News) - Go-Ahead Group PLC on Tuesday affirmed its expectations for its full financial year, despite more difficult conditions for its bus operations in the fourth quarter and a hit to margins on its GTR rail contract.
The FTSE 250-listed transport operator rail business has continued to perform well and it anticipates revenue growth of 5.1% for the Southeastern franchise, 11% for the London Midland franchise, and 3.1% for the GTR arm.
However, Go-Ahead said additional resources which have been invested in the GTR franchise to improve the service have depressed margins for the current financial year and will continue to have that effect in the next financial year.
Though Go-Ahead expects margins on the GTR franchise to improve in the longer term, margins on the contract are now expected to be around 1.5% over the life of the contract, compared to the 3.0% previously expected.
Go-Ahead shares were down 10% at the open on Tuesday to 2,186.00 pence, the worst performer in the FTSE 250.
Elsewhere, Go-Ahead said it anticipates revenue growth of 2.1% year-on-year in its regional bus arm in the financial year ending July 2, though passenger journeys are set to fall around 0.2%. The group said revenue growth has been strong in the unit, but was hit by economic weakness in the north east of England.
Revenue and mileage for the group's London bus operations have continued to grow, it said. Go-Ahead anticipates revenue for the London bus arm will grow 6.0% year-on-year in the financial year.
Go-Ahead said its expectations for the financial year are unchanged, with Chief Executive David Brown saying the group will deliver good profit growth.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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